### What he needed to do to meet his inventory reduction goal

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The details for part number 64-1909 as a basis to determine what he needed to do to meet his inventory reduction goal. Last year part number 64-1909 used 10,752 units at an average cost per unit of \$112. The cost to place an order was \$48 regardless of the quantity ordered and the SMC cost to carry inventory was 32%

Questions:

1. What would the cost to place an order need to be for Davis to meet his inventory reduction objective if Vice President of Sales Steve achieves his goal to increase sales by 9.6%

2. What would the cost to place an order need to be for Davis to meet his inventory reduction objective if Vice President of Sales Steve achieves his goal to increase sales by 9.6% and Financial Comptroller Fred achieves his goal of reducing the cost to carry inventory from 32.0% to 29.4%

3. What would the cost to place an order need to be for Davis to meet his inventory reduction objective if Vice President of Sales Steve achieves his goal to increase sales by 9.6% and Financial Comptroller Fred achieves his goal of reducing the cost to carry inventory from 32.0% to 29.4% and Purchasing Director Peter achieves his goal of reducing the average cost per unit by 5.2%

4. What would the cost to place an order need to be if Davis implemented a just in time approach so ordering 1 unit at a time is the optimal ordering quantity? Use the original variables for part number 64-1909. Your answer must be accurate to six decimal places

5. Provide three viable recommendations which would result in a lower cost to place an order. Keep in mind that providing a “viable recommendation” means you must move beyond theoretical statements and be immediately actionable. Do not skimp on your details (but don’t make anything up either) you must indicate how to lower the cost.

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