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Another popular item at the UCI bookstore is a jacket. Sales are 35 units per week, and the supplier charges $55 per unit. The cost
Another popular item at the UCI bookstore is a jacket. Sales are 35 units per week, and the supplier charges $55 per unit. The cost of placing an order with the supplier is $25. Annual holding cost for each unit is 9 percent of a hoodies value, and the store operates 49 weeks per year (it is closed over the holidays). Assume that there is no lead time and no uncertainty in the sales volume.
- Management currently chooses to order 335 units when they place an order. What is the annual ordering cost of the current ordering policy (in dollars)?
- What is the annual holding (inventory) cost of the current ordering policy (in dollars)?
- What is the total annual cost (ordering and holding costs) of the current ordering policy (in dollars)? Note: do NOT include the procurement cost.
- What is the optimal order quantity?
- What is the total annual cost (ordering and holding costs) of the optimal ordering policy (in dollars)? Note: do NOT include the procurement cost.
- How much can the shop save in terms of the annual cost if they order optimally (in dollars)?
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