Expected annual demand: 7000 Ordering cost per purchase order: $300 Carrying cost per year: $14 per wristwatch (includes required return on investment of $9 (12% x $75 purchase price) Company is open 365 days a year and the purchasing lead time is 10 days Questions 1. Calculate the reorder point 2. Calculate the EOG using revised ordering cost of $50 per purchase order and compare and comment on the difference between that and the original EOQ 3. Suppose this company (RT) could he assisted by another company MW, which says RT customers are allowed to order directly from MW who would then ship the product directly to RTs customers. MW would pay $20 to RT for every watch purchased by on of RTs customers. Comment qualitatively on how this offer will affect inventory management at RT. What factors should RT consider while deciding whether to accept MWs proposal?
Expected annual demand: 7000 Ordering cost per purchase order: $300 Carrying cost per year: $14 per wristwatch (includes required return on investment of $9 (12% x $75 purchase price) Company is open 365 days a year and the purchasing lead time is 10 days Questions 1. Calculate the reorder point 2. Calculate the EOG using revised ordering cost of $50 per purchase order and compare and comment on the difference between that and the original EOQ 3. Suppose this company (RT) could he assisted by another company MW, which says RT customers are allowed to order directly from MW who would then ship the product directly to RTs customers. MW would pay $20 to RT for every watch purchased by on of RTs customers. Comment qualitatively on how this offer will affect inventory management at RT. What factors should RT consider while deciding whether to accept MWs proposal?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Expected annual demand: 7000
Ordering cost per purchase order: $300
Carrying cost per year: $14 per wristwatch (includes required return on investment of $9 (12% x $75 purchase price)
Company is open 365 days a year and the purchasing lead time is 10 days
Questions
1. Calculate the reorder point
2. Calculate the EOG using revised ordering cost of $50 per purchase order and compare and comment on the difference between that and the original EOQ
3. Suppose this company (RT) could he assisted by another company MW, which says RT customers are allowed to order directly from MW who would then ship the product directly to RTs customers. MW would pay $20 to RT for every watch purchased by on of RTs customers. Comment qualitatively on how this offer will affect inventory management at RT. What factors should RT consider while deciding whether to accept MWs proposal?
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