Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
In Example 12.3, Solver Table was used to show what happens when the unit shortage cost varies. As the table indicates, the company orders more and allows more backlogging as the unit shortage cost decreases. Redo the Solver Table analysis, this time trying even smaller unit shortage costs. Explain what happens when the unit shortage cost is really small. Do you think a company would ever consider a really small shortage cost? Why or why not? Then redo the Solver Table analysis again, this time trying even larger unit shortage costs. How do the results in this case compare to the results from the basic EOQ model with no shortages allowed?
Example 12.3
ORDERING AUDIO CDS AT GMB WITH SHORTAGES ALLOWED
GMB is a mail-order distributor of audio CDs that sells approximately 50,000 CDs per year. Each CD is packaged in a jewel case that GMB buys from a supplier. The fixed cost of placing an order for jewel cases is $200. GMB pays $0.50 for each jewel case, and its cost of capital is 10%. The cost of storing a jewel case for one year is $0.50. GMB believes it can afford to run out of jewel cases from time to time, reasoning that this simply makes the time between customer orders and customer deliveries a bit longer. It knows that there is some cost of doing this-impatient customers can take their business elsewhere- but it is not sure what dollar amount p to attach to this cost. It decides to use a trial value of p = $52, reasoning that this value implies a $1 penalty for each extra week a customer has to wait because of a backlogged jewel case. GMB wants to develop a spreadsheet model to find the optimal order quantity, the optimal amount to backlog, and the optimal annual cost. It also wants to see how sensitive these quantities are to the unit shortage cost p.
Objective To find the order quantity and the maximum shortage allowed that minimize total annual cost, and to see how sensitive the solution is to the unit shortage cost.
Why would Prepaid Insurance have a credit balance?
a company is considering investing in a project that is expected to return 350000 four years from now. how much is the
ABC Hardware store is open for business 350 days a year. Annual demand for a power cutter at this store is 700 units. Replenishment cost is $15 per order and annual inventory holding cost is 10% of the inventory value.
Blake Inc. leased office space for business use in 2003. The terms of the lease include a 5 year initial term with 2 options for renewal of 2 years each. The annual rental charge for the lease is $120,000 including parking. During 2004, Blake unde..
wright corporation began its operations on september 1 of the current year. budgeted sales for the first three months
a machine is purchased on july 1 2009 for 181500. it has an expected useful life of 11 years and no salvage value.
errors in financial statementsthe following financial statements are available for sherwood real estate companybalance
The company just completed a single order from SkateCo for 3,200 entry-level skateboards. The order was produced in 27 batches. Each skateboard required 0.7 direct labour-hours. The selling price was $125 per skateboard, the direct materials cost ..
palisade creek co. is a merchandising business. the account balances for palisade creek co. as of may 1 2014 unless
the cost accountant for a drug company has informed you that the companys materials quality variance for a allegra was
What is the net present value of this machine assuming all cash flows occur at year-end?
on january 31 2011 b corp. issued 450000 face value 10 bonds for 450000 cash. the bonds are dated december 31 2010 and
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd