Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside’s generator production operation (which operates at a constant rate) will require 1000 components per month. Assume that ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory. Westside has 250 working days per year. Suppose that Westside’s management likes the operational efficiency of ordering once a month in quantities of 1000. How much more expensive would this policy be? Use 2 decimal places in your answer.
Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside’s generator production operation (which operates at a constant rate) will require 1000 components per month. Assume that ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory. Westside has 250 working days per year. Suppose that Westside’s management likes the operational efficiency of ordering once a month in quantities of 1000. How much more expensive would this policy be? Use 2 decimal places in your answer.
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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Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier.
Westside’s generator production operation (which operates at a constant rate) will require 1000 components per month. Assume that ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory.
Westside has 250 working days per year.
Suppose that Westside’s management likes the operational efficiency of ordering once a month in quantities of 1000. How much more expensive would this policy be? Use 2 decimal places in your answer.
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