Dufry Gift Shop Part I The Dufry Gift Shop purchases souvenir turtles from a vendor in Vieux Forte at a cost of $2,000 each. The annual holding cost for a turtle is calculated as 1.5% of the purchase cost. It costs the Gift Shop $500 to place a single order. The Gift Shop supervisor estimates that 900 turtles will be sold during each month of the upcoming year. Required: i) Determine the highest number of turtles that should be purchased by the Gift Shop in order to minimize stock administration costs. ii) What is the number of orders to be placed each year? iii) Compute the average annual ordering cost .) Conm
Dufry Gift Shop Part I The Dufry Gift Shop purchases souvenir turtles from a vendor in Vieux Forte at a cost of $2,000 each. The annual holding cost for a turtle is calculated as 1.5% of the purchase cost. It costs the Gift Shop $500 to place a single order. The Gift Shop supervisor estimates that 900 turtles will be sold during each month of the upcoming year. Required: i) Determine the highest number of turtles that should be purchased by the Gift Shop in order to minimize stock administration costs. ii) What is the number of orders to be placed each year? iii) Compute the average annual ordering cost .) Conm
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Dufry Gift Shop
Part I
The Dufry Gift Shop purchases souvenir turtles from a vendor in Vieux Forte at a cost of $2,000
each. The annual holding cost for a turtle is calculated as 1.5% of the purchase cost. It costs the
Gift Shop $500 to place a single order. The Gift Shop supervisor estimates that 900 turtles will
be sold during each month of the upcoming year.
Required:
i) Determine the highest number of turtles that should be purchased by the Gift Shop in order
to minimize stock administration costs.
ii) What is the number of orders to be placed each year?
iii) Compute the average annual ordering cost
iv) Compute the average annual carrying cost
v) Compute the total stock administration cost
Part II
The maximum sale for the Gift Shop for any one week is 300 turtles and minimum sales 150
turtles. The vendor takes anywhere from 2 to 4 weeks to deliver the merchandise after the order
is placed.
Required:
1. Determine the re-order level,
2. Determine the minimum inventory level
3. Determine the maximum inventory level for the business.
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