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
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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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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