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The Auto Centre sells, among other things, widgets. It purchases 2,000 widgets each year from Widgets R Us at a cost of $700 each
The Auto Centre sells, among other things, widgets. It purchases 2,000 widgets each year from Widgets R Us at a cost of $700 each and sell them for $1,000 each. The ordering costs per purchase order are $300 and the carrying costs are $80 per widget. The purchasing lead time for the Auto Centre is 6 days. Auto Centre is open 365 days a year. Economic Order Quantity (EOQ) = square root of 2DP C REQUIRED 1.(1.5 marks)Calculate Auto Centre's EOQ for the widgets. 2.(1 mark)Calculate the number of orders that will be placed each year for the widgets by the Auto Centre 3.(1 mark) Compute Auto Centre's reorder point for its widgets 4.(3.5 marks) Compute the gross margin /widget realized by Auto Centre for the year. 5.(2 marks) Widgets R Us has offered to allow Auto Centre's customers to order directly from Widgets R Us. Widgets R Us will pay Auto Centre $100 for every widget that Widgets R Us ships directly to Auto Centre's customers. Should Auto Centre accept this opportunity? Support your position.
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