Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tshabalala's Sport, a sporting goods store, is planning how many soccer balls it should purchase at one time and how often they should be purchased.

image text in transcribed
image text in transcribed
Tshabalala's Sport, a sporting goods store, is planning how many soccer balls it should purchase at one time and how often they should be purchased. It estimates that demand is constant at around 2000 balls per month. The average storage cost is historically R1000 per 80 balls per month. Past experience showed that soccer balls depicting last season's branding do not sell unless they are sold at a big discount. Ordering too little is also a problem as customers move their purchases to a competitor. Tshabalala sells a soccer ball for R120 and the purchase price is R65. Every order attracts delivery costs of R600 per order, irrespective of the size of the order. It takes three weeks from ordering to receiving the balls. Source: Ariel (2018) Calculate the following: 4.1 Economic order quantity (7 Marks) 4.2 Optimal variable cost (3 Marks) 4.3 Optimal total cost (4 Marks) 4.4 Reorder level (4 Marks) 4.5 Cycle length (2 Marks)

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

Cambridge International AS And A Level Economics Coursebook

Authors: Colin Bamford, Susan Grant

3rd Edition

1107679516, 978-1107679511

More Books

Students also viewed these Economics questions