The Western Jeans Company purchases denim from Cumberland Textile Mills. The Western Jeans Company uses 35,000 yards of denim per year (365 days) to make jeans. The cost of ordering denim from the textile company is $500 per order. The carrying cost per yard of denim (Ch = H*C=0.29*1.20) is $0.35 per yard annually to hold a yard of denim in inventory. Now, assume Western Jeans Company's inventory carrying cost per yard of denim is 29% of the price per yard and the price of denim from the Cumberland Textile Mills is $1.20 per yard. Now suppose textile mill will give discounted price of $1.10 per yard if it purchases 20,000 yards, $1.00 per yard if it purchases 50,000 yards, and $0.90 per yard if it purchases 70,000 yards per order. What should be the order quantity? Select one:
The Western Jeans Company purchases denim from Cumberland Textile Mills. The Western Jeans Company uses 35,000 yards of denim per year (365 days) to make jeans. The cost of ordering denim from the textile company is $500 per order. The carrying cost per yard of denim (Ch = H*C=0.29*1.20) is $0.35 per yard annually to hold a yard of denim in inventory. Now, assume Western Jeans Company's inventory carrying cost per yard of denim is 29% of the price per yard and the price of denim from the Cumberland Textile Mills is $1.20 per yard. Now suppose textile mill will give discounted price of $1.10 per yard if it purchases 20,000 yards, $1.00 per yard if it purchases 50,000 yards, and $0.90 per yard if it purchases 70,000 yards per order. What should be the order quantity? Select one:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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