Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

help answer a,b,c It is now one year later in Harvey's business. Mustard sales have boomed to 125 jars every six months and are more

help answer a,b,c image text in transcribed
It is now one year later in Harvey's business. Mustard sales have boomed to 125 jars every six months and are more consistent with standard deviation dropping to 20. Harvey has been able to drop his order cost to $40 and more accurately assessed his loss of goodwill for missed sales to be $15. Unfortunately, the federal reserve bank has increased interest rates and his cost of capital is now 25%. Given this updated information, use a (Q,R) model to determine a) The optimal values of (Q,R) i.e. at what point in inventory should a new order be placed and how many jars should be ordered. b) The safety stock level. c) The proportion of demands that are not met. It is now one year later in Harvey's business. Mustard sales have boomed to 125 jars every six months and are more consistent with standard deviation dropping to 20. Harvey has been able to drop his order cost to $40 and more accurately assessed his loss of goodwill for missed sales to be $15. Unfortunately, the federal reserve bank has increased interest rates and his cost of capital is now 25%. Given this updated information, use a (Q,R) model to determine a) The optimal values of (Q,R) i.e. at what point in inventory should a new order be placed and how many jars should be ordered. b) The safety stock level. c) The proportion of demands that are not met

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

Foundations Of Financial Management

Authors: Stanley Block

8th Canadian Edition

0070965447, 9780070965447

More Books

Students also viewed these Finance questions