Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A retailer purchases a certain type of chemical from a supplier on the following quantity discount schedule: If the order amount is less than 100

A retailer purchases a certain type of chemical from a supplier on the following quantity discount schedule: If the order amount is less than 100 kg.s, the supplier charges $30 per kg. If the order amount is at least 100 kg.s and less than 500 kg.s, the supplier applies an incremental discount where the rst 100 kg. costs $30 per kg. and the remaining amount costs $28 per kg. If the order amount is at least 500 kg.s, the supplier applies an all-units discount and charges $28 per kg. for all units. The ordering cost is $100 per order and the retail owner assumes an annual holding cost based on the annual ination rate which is 25%. The annual demand of this chemical to retailer is 800 kg.s and the demand rate stays constant in the planning horizon. Back-ordering is disallowed and both the retailer and the supplier works for 365 days in a year. Find the economic order quantity and the order cycle time (in days) that minimizes the total inventory cost. Calculate the minimum total annual inventory cost. Carry out the whole analysis and show all of your calculations. **how is the total cost calculated?**

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

Agile Governance And Audit An Overview For Auditors And Agile Teams

Authors: Christopher Wright

1st Edition

184928587X, 978-1849285872

More Books

Students also viewed these Accounting questions

Question

3. Contrast relational contexts in organizations

Answered: 1 week ago

Question

2. Describe ways in which organizational culture is communicated

Answered: 1 week ago

Question

1. Describe and compare approaches to managing an organization

Answered: 1 week ago