How frequently should I place an order to make an $1,000,000?
Selling price and demand rate:
INVENTORY MANAGEMENT SIMULATION 4 PLACE ORDER Revenue . Costs CLOSE X DECISION POINT 125 100 Place New Order Place An Order for Amulet 1.0 75 50 25 You can place a maximum order of 4,000 units in multiples of 50. The larger your order, the higher your holding costs. However, smaller orders mean more frequent re-ordering costs. 1 2 3 4 5 6 1 2 3 4 5 6 7 Order Size 50 Units . Inventory 40 Cost Per Unit: $95 30 20 Purchase Cost: $4,750 10 1 2 3 4 5 6 Shipping Fee: Normal shipping(5 days) - $6,000 Total Units Sold Total Cost: $10,750 0 PLACE ORDER & START SIMULATION CLOSE Total Pro DUSS austauun Hmmmm INVENTORY MANAGEMENT SIMULATION PLACE ORDER Revenue . Costs THIS MONTH THIS QUARTER YEAR-TO-DATE 125 100 75 Cost/Revenue ($) Costs and Revenues will appear here as the simulation runs 50 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Day of Month Inventory Units left: 0 Demand: 0 Please make a decision to begin. 40 30 20 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Day of Month Total Units Sold Total Revenue Total Costs 0 $0 $0 Total Profits for Year Boss Satisfaction Hmmmm $0.00 of $1,000,000 Goal Based on last year's numbers and expected trends into this year, our analysts have concluded the following about the Amulet: Cost of product: $95/unit The sales price of the Amulet is $200/unit. Supplier has confirmed that this will be the average per-unit cost when we place orders in 50-unit increments (Each box has 50 units). Costs of ordering and delivery: $6,000 per order We have reached an agreement with the shipping service. All purchases will be billed at a flat rate of $6,000 for each order placed in the normal order cycle, which requires a 5 days lead time. Rush orders will be charged $40 extra per unit. They will arrive the next day. The Accounting Department estimates the cost of holding inventory to be $1.35 per unit per day. This amount includes warehouse rental costs and insurance. INVENTORY MANAGEMENT SIMULATION 4 PLACE ORDER Revenue . Costs CLOSE X DECISION POINT 125 100 Place New Order Place An Order for Amulet 1.0 75 50 25 You can place a maximum order of 4,000 units in multiples of 50. The larger your order, the higher your holding costs. However, smaller orders mean more frequent re-ordering costs. 1 2 3 4 5 6 1 2 3 4 5 6 7 Order Size 50 Units . Inventory 40 Cost Per Unit: $95 30 20 Purchase Cost: $4,750 10 1 2 3 4 5 6 Shipping Fee: Normal shipping(5 days) - $6,000 Total Units Sold Total Cost: $10,750 0 PLACE ORDER & START SIMULATION CLOSE Total Pro DUSS austauun Hmmmm INVENTORY MANAGEMENT SIMULATION PLACE ORDER Revenue . Costs THIS MONTH THIS QUARTER YEAR-TO-DATE 125 100 75 Cost/Revenue ($) Costs and Revenues will appear here as the simulation runs 50 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Day of Month Inventory Units left: 0 Demand: 0 Please make a decision to begin. 40 30 20 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Day of Month Total Units Sold Total Revenue Total Costs 0 $0 $0 Total Profits for Year Boss Satisfaction Hmmmm $0.00 of $1,000,000 Goal Based on last year's numbers and expected trends into this year, our analysts have concluded the following about the Amulet: Cost of product: $95/unit The sales price of the Amulet is $200/unit. Supplier has confirmed that this will be the average per-unit cost when we place orders in 50-unit increments (Each box has 50 units). Costs of ordering and delivery: $6,000 per order We have reached an agreement with the shipping service. All purchases will be billed at a flat rate of $6,000 for each order placed in the normal order cycle, which requires a 5 days lead time. Rush orders will be charged $40 extra per unit. They will arrive the next day. The Accounting Department estimates the cost of holding inventory to be $1.35 per unit per day. This amount includes warehouse rental costs and insurance
