f the FUS Corporation has the following data about 5 locations: Location Fixed Cost ($) 200,000 220,000 Variable Cost (S) A 10 12 150,000 300,000 400,000 14 D E f the firm would like to produce 100,000 units, which location is recommended graphically and nathematically?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Solve problems 1 and 2
Problem 1:
If the FUS Corporation has the following data about 5 locations:
Fixed Cost ($)
200,000
220,000
150,000
300,000
Location
Variable Cost ($)
A
10
B
12
C
14
D
E
400,000
8
If the firm would like to produce 100,000 units, which location is recommended graphically and
mathematically?
Problem2:
The soft goods department of a large department store sells 175 units per month of a certain large bath
towel. The unit cost of a towel to the store is $2.50 and the cost of placing an order has been estimated
to be $12.00. The store uses an inventory carrying charge of 27% per year. Determine the optimal
order quantity, order frequency, and the annual cost of inventory management. If, through automation
of the purchasing process, the ordering cost can be cut to $4.00, what will be the new economic order
quantity, order frequency, and annual inventory management cost? Explain these results.
Transcribed Image Text:Problem 1: If the FUS Corporation has the following data about 5 locations: Fixed Cost ($) 200,000 220,000 150,000 300,000 Location Variable Cost ($) A 10 B 12 C 14 D E 400,000 8 If the firm would like to produce 100,000 units, which location is recommended graphically and mathematically? Problem2: The soft goods department of a large department store sells 175 units per month of a certain large bath towel. The unit cost of a towel to the store is $2.50 and the cost of placing an order has been estimated to be $12.00. The store uses an inventory carrying charge of 27% per year. Determine the optimal order quantity, order frequency, and the annual cost of inventory management. If, through automation of the purchasing process, the ordering cost can be cut to $4.00, what will be the new economic order quantity, order frequency, and annual inventory management cost? Explain these results.
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