Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A business sells 96 units per day at a price of $100 per unit. Based upon past performance when it has a stockout, 80% of

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
A business sells 96 units per day at a price of $100 per unit. Based upon past performance when it has a stockout, 80% of customers are willing to wait on a backorder, while the remaining cuslomers demand an immediate refund. It cost $15 to process each backorder, and to maintain goodwill, they give a $20 involce reduction when a customer agrees to accept a backorder. The company has calculated its inventory carrying rate is 30%. The company is considering swiching suppliers. If all other operating cost stay the same and given the information in the table below, calculate financial impact of back-orders, calculate the safety stock for both options calculate the safety stock cost reduction. And, then determine whether it should switch suppliers (note: exoept for numbers less than 10, round all answers to the nearest whole number and report as a whole number-with no other symbols, including commas and decimal points. Z-scores and numbers less than 10 , should be reported as a three-digit number, Le., 25=0.25 and 1.586=1.59 ) Current Supplier New Supplier Process Calculations Service Failure Number of backorders Number of lost sales Cost Calculations Service Failure Cost Cost of lost saies Cost of backorder Invoice deduction Total daily cost of service failure Inventory Cost Z-Score Average stock Cost Calculations Service Failure Cost Cost of lost sales Cost of backorder Invoice deduction Total daily cost of service failure Inventory Cost Z-Score Average stock demand Safety stock Average total stock Annual Cost Daily cost Should the company switch suppliers (answers yeso)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Operations Management Processes and Supply Chains

Authors: Lee J. Krajewski, Larry P. Ritzman, Manoj K. Malhotra

10th edition

978-013280747, 132807394, 9780132951814, 132807475, 132951819, 978-0132807395

More Books

Students also viewed these General Management questions