The increase in sales from the rebate that would make the rebate and price cut equally desirable. Price cut: Price cut is the cutting down the price of a product. It is usually done to increase sales and improve the market share of a product. Price rebate: Price rebate is when a certain amount of the purchase price is returned to the buyer after the buyer has purchased a certain volume of a product.

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Question content area Part 1 Oakwood Hospital is considering using ABC analysis to classify laboratory SKUs into three categories: those that will be delivered daily from their supplier (Class A items), those that will be controlled using a continuous review system (B items), and those that will be held in a two bin system (C items). The following table shows the annual dollar usage for a sample of eight SKUs. Fill in the blanks for annual dollar usage below. (Enter your responses rounded to the nearest whole number.) Part 2 Rank the SKUs in descending order on the basis of their annual dollar usage and fill in the table with the ranked SKU's percentage of dollar usage. (Enter your responses rounded to two decimal places.)

Answer 1

Question

Chapter 2, Problem 27P

a)

Summary Introduction

To determine: The increase in sales from the rebate that would make the rebate and price cut equally desirable.

Price cut:

Price cut is the cutting down the price of a product. It is usually done to increase sales and improve the market share of a product.

Price rebate:

Price rebate is when a certain amount of the purchase price is returned to the buyer after the buyer has purchased a certain volume of a product.

b)

Summary Introduction

To perform: A sensitivity analysis that could be used to help determine the best decision for Company D.

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Question content area Part 1 Oakwood Hospital is considering using ABC analysis to classify laboratory SKUs into three categories: those that will be delivered daily from their supplier (Class A items), those that will be controlled using a continuous review system (B items), and those that will be held in a two bin system (C items). The following table shows the annual dollar usage for a sample of eight SKUs. Fill in the blanks for annual dollar usage below. (Enter your responses rounded to the nearest whole number.) Part 2 Rank the SKUs in descending order on the basis of their annual dollar usage and fill in the table with the ranked SKU's percentage of dollar usage. (Enter your responses rounded to two decimal places.)

Sam's Pet Hotel operates 51 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $13.00 per bag. The following information is available about these bags: > Demand 70 bags/week > Order cost $58.00/order > Annual holding cost 30 percent of cost > Desired cycle-service level = 80 percent >Lead time 4 weeks (24 working days) > Standard deviation of weekly demand = 15 bags > Current on-hand inventory is 320 bags, with no open orders or backorders. a. Suppose that the weekly demand forecast of 70 bags is incorrect and actual demand averages only 45 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $ higher owing to the error in EOQ. (Enter your response rounded to two decimal places.)

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