Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2. (11 points) Part A. A beer distributor sells 500 cases of regular 12-oz. Budweiser per week for 50 weeks each year -assume

image text in transcribed

Question 2. (11 points) Part A. A beer distributor sells 500 cases of regular 12-oz. Budweiser per week for 50 weeks each year -assume that there are 50 weeks in a year - from its warehouse in Central Austin. The distributor currently orders a one-week supply of 500 cases at the beginning of each week from a supplier at a purchase cost of $8 per case. They also pay a fixed cost of $100 for each delivery. The beer distributor estimates its annual per-case inventory holding cost (cost of capital, insurance, etc.) at 25 percent of purchase cost. (a) What is the distributor's annual ordering plus holding costs (in S)? (1) (b) What is the distributor's ordering plus holding costs (in S) per case of beer? Round up or down to two significant figures after the decimal point. (c) How long (in weeks) on average does a case of beer sit on the distributor's shelf before it is sold? Do not round up or down. (1) (1) (d) What order size would you recommend to the beer distributor? Choose the nearest integer. (1) (e) For the distributor, what is the minimum possible annual cost (in S) of ordering and holding? Choose the nearest integer. (1) (f) For the distributor, what is the minimum possible cost (in S) of ordering and holding per case of beer? Round up or down to two significant figures after the decimal point. (1) (g) Consider the reduction in the cost of ordering and holding per case of beer if the distributor switches to the EOQ policy. Is it More or Less than 35%? (1)

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

Effective small business management An Entrepreneurial Approach

Authors: Norman M. Scarborough

10th Edition

132157462, 978-0132157469

More Books

Students also viewed these General Management questions