Fuego Limited is a table-glass retailer located in Vancouver. The company purchases glasses from Anderson PLC. The details of the table glasses are as follows: The purchase price per glass – $3,000 Cost of an order - $500 The annual cost of carrying a glass - 2% of the purchase price Monthly Demand - 1,250 Units The company has been offered a discount of 1% on the price of a table glass if the lot size is 3,000 table glasses at a time. Required: i. Calculate the Economic Order Quantity. ii. Calculate the total inventory cost. iii. Draw a graph and discuss the behavior of the total inventory holding cost, total ordering cost, and total cost for the given scenario. iv. Advise whether the quantity discount offer can be accepted (Assume that the inventory carrying cost does not vary according to the discount policy)
Fuego Limited is a table-glass retailer located in Vancouver. The company purchases glasses from Anderson PLC. The details of the table glasses are as follows: The purchase price per glass – $3,000 Cost of an order - $500 The annual cost of carrying a glass - 2% of the purchase price Monthly Demand - 1,250 Units The company has been offered a discount of 1% on the price of a table glass if the lot size is 3,000 table glasses at a time. Required: i. Calculate the Economic Order Quantity. ii. Calculate the total inventory cost. iii. Draw a graph and discuss the behavior of the total inventory holding cost, total ordering cost, and total cost for the given scenario. iv. Advise whether the quantity discount offer can be accepted (Assume that the inventory carrying cost does not vary according to the discount policy)
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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Fuego Limited is a table-glass retailer located in Vancouver. The company purchases glasses from Anderson PLC. The details of the table glasses are as follows:
The purchase price per glass – $3,000
Cost of an order - $500
The annual cost of carrying a glass - 2% of the purchase price
Monthly Demand - 1,250 Units
The company has been offered a discount of 1% on the price of a table glass if the lot size is 3,000 table glasses at a time.
Required:
i. Calculate the Economic Order Quantity.
ii. Calculate the total inventory cost.
iii. Draw a graph and discuss the behavior of the total inventory holding cost, total ordering cost, and total cost for the given scenario.
iv. Advise whether the quantity discount offer can be accepted (Assume that the inventory carrying cost does not vary according to the discount policy)
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