Question
Problem 13-14 A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8 per stone for quantities of
Problem 13-14
A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8 per stone for quantities of 600 stones or more, $9 per stone for orders of 400 to 599 stones, and $10 per stone for lesser quantities. The jewelry firm operates 200 days per year. Usage rate is 25 stones per day, and ordering costs are $48. |
a. | If carrying costs are $2 per year for each stone, find the order quantity that will minimize total annual cost. (Round your intermediate calculations and final answer to the nearest whole number.) |
Order quantity | stones |
b. | If annual carrying costs are 30 percent of unit cost, what is the optimal order size? (Round your intermediate calculations and final answer to the nearest whole number.) |
Optimal order size | stones |
c. | If lead time is six working days, at what point should the company reorder? |
Reorder quantity | stones |
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