Rocky Mountain Tire Center sells 7,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 30% of the purchase price of the tires per year. The purchase price is $23 per tire if fewer than 200 tires are ordered, $19 per tire if 200 or more-but fewer than 5,000-tires are ordered, and $15 per tire if 5,000 or more tires are ordered. a) How many tires should Rocky Mountain order each time it places an order? Rocky Mountain's optimal order quantity is units (enter your response as a whole number). b) What is the total cost of this policy? Total annual cost of ordering optimal order size = $ (round your response to the nearest whole number).
Rocky Mountain Tire Center sells 7,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 30% of the purchase price of the tires per year. The purchase price is $23 per tire if fewer than 200 tires are ordered, $19 per tire if 200 or more-but fewer than 5,000-tires are ordered, and $15 per tire if 5,000 or more tires are ordered. a) How many tires should Rocky Mountain order each time it places an order? Rocky Mountain's optimal order quantity is units (enter your response as a whole number). b) What is the total cost of this policy? Total annual cost of ordering optimal order size = $ (round your response to the nearest whole number).
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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