Globe Inc. is a distributor of DVDs. DVD Mart is a local retail outlet which sells blank and recorded DVDs. DVD Mart purchases tapes from Globe at $25.00 per DVD; DVDs are shipped in packages of 60. Globe pays all incoming freight, and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality. Annual demand is 312,000 DVDs at a rate of 6,000 DVDs per week. DVD Mart earns 15% on its cash investments. The purchase-order lead time is one week. The following cost data are available:
Relevant ordering costs per purchase order $114.50 Carrying costs per package per year: Relevant insurance, materials handling, breakage, etc., per year $ 4.50
1) What is the economic order quantity?A) 64.08 packagesB) 21.04 packagesC) 37.50 packagesD) 72.03 packages
2) What are the annual relevant ordering costs?A) $9,057B) $7,157C) $8,266D) $7,121
3) What are the annual relevant carrying costs?A) $7,122B) $8,265C) $9,057D) $7,157
4) What are the relevant total costs?A) $14,279B) $18,114C) $16,531D) $14,278
5) How many deliveries will be made during each time period?A) 72.19 deliveriesB) 60.11 deliveriesC) 89.23 deliveriesD) 52.18 deliveries