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A bedding store has a steady demand for 300 mattresses each year. The store orders mattresses from a regional wholesaler at a cost of $50 per order. The cost of each mattress depends on the order size, and the annual holding cost for mattresses is 5% of the unit cost. The store sells the mattresses for a retail price of $250. a. Use this information to fill in the following table in your answer booklet: Annual demand D Order cost Co Holding cost ratio I Selling price per unit r Annual revenue rD b. The wholesaler offers the following discounts depending on the order size: Discount Unit cost C Discount category Order size 0-49 1 0% $200 2 50-99 5% $190 3 100 or more 10% $180 For each discount category, find the holding cost C₁, economic order quantity Q and total annual cost TC -0°C, +Co+DC. +DC . How many mattresses should the store order at a time to minimise the total annual cost? c. Fill in the following table in your answer booklet based on the economic order quantity chosen in (b). Economic order quantity ė Unit cost C Cost of holding one unit Ch Annual holding cost 10% Optimal order frequency D e Annual order cost Annual inventory cost Total annual cost Annual profit -Co DC TC rD-TC

A bedding store has a steady demand for 300 mattresses each year. The store orders mattresses from a regional wholesaler at a cost of $50 per order. The cost of each mattress depends on the order size, and the annual holding cost for mattresses is 5% of the unit cost. The store sells the mattresses for a retail price of $250. a. Use this information to fill in the following table in your answer booklet: Annual demand D Order cost Co Holding cost ratio I Selling price per unit r Annual revenue rD b. The wholesaler offers the following discounts depending on the order size: Discount Unit cost C Discount category Order size 0-49 1 0% $200 2 50-99 5% $190 3 100 or more 10% $180 For each discount category, find the holding cost C₁, economic order quantity Q and total annual cost TC -0°C, +Co+DC. +DC . How many mattresses should the store order at a time to minimise the total annual cost? c. Fill in the following table in your answer booklet based on the economic order quantity chosen in (b). Economic order quantity ė Unit cost C Cost of holding one unit Ch Annual holding cost 10% Optimal order frequency D e Annual order cost Annual inventory cost Total annual cost Annual profit -Co DC TC rD-TC

Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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A bedding store has a steady demand for 300 mattresses each year. The store orders mattresses from a regional wholesaler at a cost of $50 per order. The cost of each mattress depends on the order size, and the annual holding cost for mattresses is 5% of the unit cost. The store sells the mattresses for a retail price of $250. a. Use this information to fill in the following table in your answer booklet: D Annual demand Order cost Co Holding cost ratio I Selling price per unit 7" Annual revenue rD b. The wholesaler offers the following discounts depending on the order size: Discount category Order size Discount Unit cost C 1 0-49 0% $200 2 50-99 5% $190 3 100 or more 10% $180 For each discount category, find the holding cost C₁, economic order quantity Q and total annual cost TC TC = = 10 °C ₂ + 2 = C₁ + DC Co+DC. How many mattresses should the store order at a time to minimise the total annual cost? c. Fill in the following table in your answer booklet based on the economic order quantity chosen in (b). Economic order quantity g Unit cost с Cost of holding one unit Ch Annual holding cost 10°Ch Optimal order frequency o Annual order cost Annual inventory cost Total annual cost Annual profit - Co Q DC TC rD-TC
Transcribed Image Text:A bedding store has a steady demand for 300 mattresses each year. The store orders mattresses from a regional wholesaler at a cost of $50 per order. The cost of each mattress depends on the order size, and the annual holding cost for mattresses is 5% of the unit cost. The store sells the mattresses for a retail price of $250. a. Use this information to fill in the following table in your answer booklet: D Annual demand Order cost Co Holding cost ratio I Selling price per unit 7" Annual revenue rD b. The wholesaler offers the following discounts depending on the order size: Discount category Order size Discount Unit cost C 1 0-49 0% $200 2 50-99 5% $190 3 100 or more 10% $180 For each discount category, find the holding cost C₁, economic order quantity Q and total annual cost TC TC = = 10 °C ₂ + 2 = C₁ + DC Co+DC. How many mattresses should the store order at a time to minimise the total annual cost? c. Fill in the following table in your answer booklet based on the economic order quantity chosen in (b). Economic order quantity g Unit cost с Cost of holding one unit Ch Annual holding cost 10°Ch Optimal order frequency o Annual order cost Annual inventory cost Total annual cost Annual profit - Co Q DC TC rD-TC
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