Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 775 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $48 per order. The cost schedules of two suppliers are as follows: Vendor 1 Quantity Price/lb 1-499 500-999 1,000+ This exercise contains only parts a, b, and c a) What is the economic order quantity for each supplier? 0 Vendor 2 Quantity $17.00 1-399 $16.75 $16.50 Price/lb $17.10 $16.85 400-799 800-1,199 $16.60 1,200+ $16.25
Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 775 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $48 per order. The cost schedules of two suppliers are as follows: Vendor 1 Quantity Price/lb 1-499 500-999 1,000+ This exercise contains only parts a, b, and c a) What is the economic order quantity for each supplier? 0 Vendor 2 Quantity $17.00 1-399 $16.75 $16.50 Price/lb $17.10 $16.85 400-799 800-1,199 $16.60 1,200+ $16.25
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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SM4
Transcribed Image Text:Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled.
Emery uses 775 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order
costs to be $48 per order. The cost schedules of two suppliers are as follows:
D
Vendor 1
Quantity Price/lb
1-499
$17.00
500-999
$16.75
1,000+
$16.50
This exercise contains only parts a, b, and c.
a) What is the economic order quantity for each supplier?
Vendor 2
Quantity
1-399
400-799
800-1,199
1,200+
Price/lb
$17.10
$16.85
$16.60
$16.25
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