Question
PLEASE ANSWER BOTH PARTS USING NUMBERS PROVIDED AND SHOW CALCULATIONS. I HAVE ASKED 5 TIMES BUT NONE WERE CORRECT a) manufacturer of automobiles plans on
PLEASE ANSWER BOTH PARTS USING NUMBERS PROVIDED AND SHOW CALCULATIONS. I HAVE ASKED 5 TIMES BUT NONE WERE CORRECT
a) manufacturer of automobiles plans on using 20,000 widgets in the assembly process over the next year. The firm buys widgets from a supplier who charges $50 for each lot of widgets delivered. Assume that the firm uses widgets at a constant rate throughout the year. If the cost of carrying inventories of widgets is 8 cents per unit, than what size lots of widgets should the firm order from its supplier? What is the optimal level of inventory?
b) suppose the widget supplier were to offer an alternative deal whereby widget delivery is billed as a fixed charge per lot of $18 plus 1 cent per widget. Which deal is better for the automobile manufacturer? Explain.
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