Bike Friday is a small manufacturer of high-end folding travel bicycles located in Eugene, Oregon. The bikes

Question:

Bike Friday is a small manufacturer of high-end folding travel bicycles located in Eugene, Oregon. The bikes can be folded and carried in a Travelcase. In the late 1990s, the controller of Bike Friday was looking into ways to cut costs. At that time, the company purchased the Travelcases in lot sizes of 100. at a unit price of $65 plus 54.50 for shipping expense. A lot would last a little more than one month. The purchase lead time was six to eight weeks. The controller discovered that i f the company ordered a full truckload of 500 Tmvelcases at a time, the unit price would be $50 plus $2.50 for shipping expense. However, Bike Friday would need a bigger storage space (350 square feet) which was not available in-house. Assuming that a nearby storage space could be leased for $400 a month, holding cost rate of 20 percent per unit per year, and order cost of $50 per order, determine if buying a truckload of Travelcases would have a lower total cost.

image text in transcribed
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Operations Management

ISBN: 978-0071091428

4th Canadian edition

Authors: William J Stevenson, Mehran Hojati

Question Posted: