Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

b ) For the value of order quantity Q , you can round it to the nearest integer. ( 2 5 points ) You start

b) For the value of order quantity Q, you can round it to the nearest integer.
(25 points) You start a t-shirt business, where you sell red and blue shirts. There is a steady demand of 280 red shirts per year and 220 blue shirts per year. Supplier 1 will sell you shirts of either color at $4 each, and will charge an additional $1600 thsetup an order regardless of the quantity and color(s) of shirts purchased. Supplier 2 only stocks red shirts and sells them for $3.60 each, and charges an addition $100 to setup an order. Order fulfillment isn't immediate and orders from either supplier take one year to arrive. All demand must be fulfilled.
Assume a 10% annual interest rate.
(a) If you were to decide to order each color of shirt from the cheapest supplier, how many red shirts should you request per order, how often would you place an order for red shirts, and at what inventory level of red shirts should each order be placed?
(b) Under the same strategy given in part (a), how many blue shirts would you request per order, how often should you place an order for blue shirts, and at what inventory level of blue shirts should each order be placed?
(c) If you decide to order all your shirts from the same supplier, allowing you to place orders containing both colors of shirts (while still only paying one setup cost per order), how many shirts should you request per order, and how often would you place an order?
(d) Under the strategy given in part (c), what fraction of shirts per order should be red, and what fraction should be blue? Hint: this should be an easy problem; ignore rounding issues and don't overthink it!
image text in transcribed

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_2

Step: 3

blur-text-image_3

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

Fundamentals of Management

Authors: Robbins, DeCenzo, Coulter

7th Edition

132996855, 0-13-610982-9 , 9780132996853, 978-0-13-61098, 978-0136109822

More Books

Students also viewed these General Management questions