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XYZ company is a subcontractor of the ABC company. XYZ manufactures items and directly sells them to ABC co where ABC re excess inventory. Annual demand D-20000 units. Setup (ordering) t S- $150. Namely, whenever a batch is to be produced for fine- ing all equipments a cost of $100 is incurred. Due to economy of le, a special contract has been signed between ABC and XYZ where prices depend on the quantity purchased by XYZ.CO

XYZ company is a subcontractor of the ABC company. XYZ manufactures items and directly sells them to ABC co where ABC re excess inventory. Annual demand D-20000 units. Setup (ordering) t S- $150. Namely, whenever a batch is to be produced for fine- ing all equipments a cost of $100 is incurred. Due to economy of le, a special contract has been signed between ABC and XYZ where prices depend on the quantity purchased by XYZ.CO

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Q2) XYZ company is a subcontractor of the ABC company. XYZ co. manufactures items and directly sells them to ABC co where ABC store excess inventory. Annual demand D-20000 units. Setup (ordering) cost S- $150. Namely, whenever a batch is to be produced for fine- tuning all equipments a cost of $100 is incurred. Due to economy of scale, a special contract has been signed between ABC and XYZ where unit prices depend on the quantity purchased by XYZ co: Quantity 0-2499 2500-3199 3200- Discount 1 2 3 Unit Price (P) $5 $4 $3 The holding costs are also charged to XYZ company, with the formula H-IxP where P is the unit price and I - 20% as the adjusted interest rate. Moreover, the daily production rate of the ABC company is p-15 units/day and the daily demand rate of the XYZ company is d-10 units/day. a) Compute the production order quantities with discounts. Show computations b) Compute total costs
Transcribed Image Text:Q2) XYZ company is a subcontractor of the ABC company. XYZ co. manufactures items and directly sells them to ABC co where ABC store excess inventory. Annual demand D-20000 units. Setup (ordering) cost S- $150. Namely, whenever a batch is to be produced for fine- tuning all equipments a cost of $100 is incurred. Due to economy of scale, a special contract has been signed between ABC and XYZ where unit prices depend on the quantity purchased by XYZ co: Quantity 0-2499 2500-3199 3200- Discount 1 2 3 Unit Price (P) $5 $4 $3 The holding costs are also charged to XYZ company, with the formula H-IxP where P is the unit price and I - 20% as the adjusted interest rate. Moreover, the daily production rate of the ABC company is p-15 units/day and the daily demand rate of the XYZ company is d-10 units/day. a) Compute the production order quantities with discounts. Show computations b) Compute total costs
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