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1. Eagles Golf is a retail and wholesale company selling golf equipment and accessories. Its business was relatively steady compared with previous years except for
1. Eagles Golf is a retail and wholesale company selling golf equipment and accessories. Its business was relatively steady compared with previous years except for the unusual heavy rain in November caused flooding everywhere making deliveries impossible in many days of the month, affecting the delivery frequency. The followings are the monthly deliveries and associated costs in the last 12 months. It is reviewing whether the company should outsource its warehousing and delivery to a logistic company which charges a fixed monthly administration fee of $80,000 plus a delivery charge of $30 per delivery. Total Deliveries Total Costs Costs January 1,250 $110,000 July 2,500 $180,000 February 1,600 $130,000 August 1,800 $140,000 March 2,000 $155,000 September 1,500 $120,000 April 2,200 $165,000 October 1,900 $150,000 May 2,600 $190,000 November $110,000 June 2,800 $226,250 December 2,700 $230,000 Using High-Low Method to help the managing executive team to decide at what quantity level will Eagles Golf benefit from engaging a third party logistic services? (Tips: Using High-Low Method to get the cost function first, then compare the cost of previous plan with the third party logistic plan)
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