Question
M&M Co sells both Product Sweet and Product Candy, with sales of both products occurring evenly throughout the year. Product Sweet. The annual demand for
M&M Co sells both Product "Sweet" and Product "Candy", with sales of both products occurring evenly throughout the year. Product "Sweet". The annual demand for Product "Sweet" is A units and an order for new inventory is placed two times each month. Each order costs $B to place. The cost of holding Product"Sweet" in inventory is $C per unit per year. Buffer inventory is equal to 50,000 units. Product "Candy".The annual demand for Product "Candy" is D units per year and M&M Co buys in this product at $E per unit on F days credit. The supplier has offered an early settlement discount of G% for settlement of invoices within 30 days. Other information. M&M Co finances working capital with short-term finance costing J% per year. Assume that there are 365 days or 52 weeks in each year.Required: (a) Calculate the following values for Product "Sweet": The total cost of the current ordering policy; the total cost of an ordering policy using the economic order quantity; the net cost or saving of Introducing an ordering pollcy using the economic order quantity. Describe the Inventory management policy If the Inventory delivery time is 3 days. (b) The supplier has offered a bulk discount of H% for 400 000 units order. Calculate the net value in dollars to M&M Co of accepting the bulk discount for Product "Sweet", If purchasing price Is SI per unlt. (c) Calculate the net value In dollars to M&M Co of accepting the early settlement discount for Product "Candy".
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