Company U produces health care appliances for hospitals and homes. It is producing testing kit to test blood pressure. Company U purchases the display unit from a supplier for five years. The supplier with which Company U is purchasing the display kit was bought out by another supplier who cancelled the six-week ordering system. However the manager of the purchasing department Person TC is not in the idea of changing the ordering system. Person TC describes that it takes $32 to order and receive the shipment and the company assembles 89 kits a week and the weekly carrying cost is 0.08 per unit. To recommend: Any changes to optimal order interval.

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Chapter 13, Problem 1.2CQ

Summary Introduction

Introduction:

Company U produces health care appliances for hospitals and homes. It is producing testing kit to test blood pressure. Company U purchases the display unit from a supplier for five years.

The supplier with which Company U is purchasing the display kit was bought out by another supplier who cancelled the six-week ordering system. However the manager of the purchasing department Person TC is not in the idea of changing the ordering system.

Person TC describes that it takes $32 to order and receive the shipment and the company assembles 89 kits a week and the weekly carrying cost is 0.08 per unit.

To recommend: Any changes to optimal order interval.

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