Question

A company Motorsports sells a new sports car. Here are the records of shipments and sales...

A company Motorsports sells a new sports car. Here are the records of shipments and sales for the six months of this year. The BOM inventory is the number of cars on hand just before the first business day of the month. Sales is the number of cars sold during the month, including new backorders. Received is the number of cars received on the first business day of the month.

Company inventory and sales records

Month

BOM inventory

Sales

Received

BO Cost

Holding

January

13

35

20

February

24

20

March

21

25

April

16

20

May

20

20

June

23

25

  1. Determine the BOM inventory for February through June.
    1. Customers are willing to backorder the sports car, but company gives a $2000 discount if the car has to be backordered. Calculate the backorder costs for each month and put them in the table.
    1. The holding cost for unsold cars is $1000 per car-month. Calculate the holding costs and put them in the table.
    1. What is the total cost of backorders and holding for company over the six-month period?

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