Question

Jim recently acquired a designer shoe store in downtown Silver Spring. The former owner always ordered 100 pairs of show. Jim wants to reevaluate this policy. Based on his analysis, the cost to place each order is $40 and the holding cost is $12 per shampoo bottle per year. The annual demand for this product is 2500 pairs. Should Jim change the current order policy and, if so, how much can she save? Answers in two decimal places. (Hint: Calculate annual total cost using the old and the new policy and compare)

Answer 1

Jim should change the policy since the new policy gives him a profit of $50.80

Thanks

answered by: anonymous