Question

The office manager for the Gotham Life Insurance Company orders letterhead stationery from an office products...

The office manager for the Gotham Life Insurance Company orders letterhead stationery from an office products firm in boxes of 500 sheets. The company uses 6,500 boxes per year. Annual carrying costs are $3 per box, and ordering costs are $28. The following discount price schedule is provided by the office supply company: Order Quantity (in boxes) Price per Box 200-999 $16 1000-2999 14 3000-5999 13 6000+ 12 a. Determine the optimal order quantity and the total annual inventory cost. b. Determine the optimal order quantity and total annual inventory cost for boxes of stationery if the carrying cost is 20% of the price of a box of stationery.

ORDERING ORDERING ORDERING ORDERING
EOQ          1,000          3,000      6,000

Homework Answers

Answer #1

I hope my efforts will be fruitful to you...?

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
13-29. The office manager for the Metro Life Insurance Company orders letterhead stationery from an office...
13-29. The office manager for the Metro Life Insurance Company orders letterhead stationery from an office product firm in boxes of 500 sheets. The company uses 6500 boxes per year. Annual carrying costs are $3 per box, and ordering costs are $28. The following discount price schedule is provided by the office supply company: Order Quantity (boxes) Price per Box 200–999 $16 1000–2999 14 3000–5999 13 6000+ 12 A. Determine the optimal order quantity and the total annual inventory cost....
Suppose Stanley's Office Supply purchases 90,000 boxes of pens every year. Ordering costs are $133.95 per...
Suppose Stanley's Office Supply purchases 90,000 boxes of pens every year. Ordering costs are $133.95 per order and carrying costs are $0.75 per box. Moreover, management has determined that the EOQ is 5,669.92 boxes. Note: The ordering costs and EOQ differ from problem 1. The vendor now offers a quantity discount of $0.02 per box if the company buys pens in order sizes of 10,000 boxes. Determine the before-tax benefit or loss of accepting the quantity discount. (Assume the carrying...
Using the data from problem 13, Big Box Office Supply (BBOS) is able to negotiate a...
Using the data from problem 13, Big Box Office Supply (BBOS) is able to negotiate a reduction in the carrying costs to $3.50 per chair, but BBOS’s chair supplier offers a quantity discount of $0.25 per chair if BBOS orders 5,000 chairs at a time rather than the EOQ. Determine the before–tax benefit or loss of accepting the quantity discount. (Assume the carrying cost remains at $3.50 per chair whether or not the discount is taken.) Data from # 13...
Part A Suppose Big Box Office Supply (BBOS) purchases 100,000 office chairs every year. Ordering costs...
Part A Suppose Big Box Office Supply (BBOS) purchases 100,000 office chairs every year. Ordering costs are $95.00 per order and carrying costs are $5.25 per chair. a) What is BBOS’s total inventory cost per year, including both carrying costs and ordering costs, if BBOS orders the EOQ of office chairs? Part B Using the same data as Part A, Big Box Office Supply (BBOS) is able to negotiate a reduction in the carrying costs to $3.50 per chair, but...
Suppose Stanley's Office Supply purchases 50,000 boxes of pens every year. Ordering costs are $100 per...
Suppose Stanley's Office Supply purchases 50,000 boxes of pens every year. Ordering costs are $100 per order, carrying costs are 5% of the inventory value, and the price is of $2.00 per box. The vendor now offers a quantity discount of 1% per box if the company buys pens in order sizes of 20,000 boxes. Should the company accept the quantity discount? Show your calculations to justify your decision.
10. Suppose Stanley's Office Supply purchases 50,000 boxes of pens every year. Ordering costs are $100...
10. Suppose Stanley's Office Supply purchases 50,000 boxes of pens every year. Ordering costs are $100 per order, carrying costs are 5% of the inventory value, and the price is of $2.00 per box. The vendor now offers a quantity discount of 1% per box if the company buys pens in order sizes of 20,000 boxes. Should the company accept the quantity discount? Show your calculations to justify your decision.
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with...
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 5,950 units per year. The cost of each unit is $104, and the inventory carrying cost is $11 per unit per year. The average ordering cost is $29 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 119 units. (This is a...
The Western Jeans Company purchases denim from Cumberland Textile Mills. The Western Jeans Company uses 35,000...
The Western Jeans Company purchases denim from Cumberland Textile Mills. The Western Jeans Company uses 35,000 yards of denim per year to make jeans. The cost of ordering denim from the textile company is $500 per order. It costs Western $0.35 per yard annually to hold a yard of denim in inventory. Determine the optimal number of yards of denim the Western Jeans Company should order, the minimum total annual inventory cost, the optimal number of orders per year, and...
A large law firm uses an average of 50 boxes of copier paper a day. The...
A large law firm uses an average of 50 boxes of copier paper a day. The firm operates 260 days a year. Storage and handling costs for the paper are $40 a year per box, and it costs approximately $70 to order and receive a shipment of paper. a. What order size would minimize the sum of annual ordering and carrying costs? b. Compute the total annual cost using your order size from part a c. Except for rounding, are...
SHOW ALL STEPS, FORMULAS, AND EXPLANATIONS A large law firm uses an average of 40 boxes...
SHOW ALL STEPS, FORMULAS, AND EXPLANATIONS A large law firm uses an average of 40 boxes of copier paper a day. The firm operates 260 days a year. Storage and handling costs for the paper are $30 a year per box, and it costs approximately $60 to order and receive a shipment of paper. a. What order size would minimize the sum of annual ordering and carrying costs? b. Compute the total annual cost using your order size from part...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT