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Dawmart is an international retail store. Dawmart's managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system
Dawmart is an international retail store. Dawmart's managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system costs Dawmart $1,000,000 per month and $45 per order. Dawmart has two options, a partially automated B2B and a fully automated B2B system. The partially automated B2B system will have a foxed cost of $6,000,000 per month and a variable cost of $30 per order. The fully automated B2B system has a fixed cost of $13,200,000 per month and a variable cost of $20 per order. Based on data from the past 2 years, Dawmart has determined the following distribution on monthly orders (Click the icon to view the data) Read the requirements Order level of orders Probability 350,000 orders 16,750,000 550,000 orders 25,750,000 0.05- 0.20- $ 750,000 orders 34,750,000 0.35 cost of orders 837,500 5,150,000 12,162 500 18,150.000 Total expected cost of plan Determine the monthly cost of each order level under the partially automated plan and then compute the expected cost. Partially automated plan Total monthly cost Total expected Order level of orders Probability" cost of orders 350,000 orders 16,500,000 0.05 $ 825,000 550,000 orders 22,500,000 0.20- 750,000 orders 28.500.000 0.35- 4,500,000 9,975,000
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