Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ford and GM carry spare parts for their dealers at a third-party warehouse in the GTA area. Demand for Ford spare parts is 150 units
Ford and GM carry spare parts for their dealers at a third-party warehouse in the GTA area. Demand for Ford spare parts is 150 units per month, whereas demand for GM parts is 200 per month. Each spare part costs $100, and the holding cost is 25% for Ford and 20% for GM. Currently each company uses a separate truck to ship these parts. Each truck has a fixed cost of $500 for Ford and $450 for GM.
- What is the optimal order quantity for Ford?
- What is the optimal order quantity for GM?
- What is the total annual cost of both companies combined?
- A third-party provider has offered to combine shipments for each of the two companies one a single truck. This will increase the cost of each truck to $640. If the two companies agree on the joint shipment, what is the optimal lot size for Ford?
- What is the optimal lot size for GM?
- What is the total annual cost for both companies combined when shipping jointly?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started