5. Quantity Discount Model Suntech Manufacturing Company uses 5,300 scroll wheels for the mouse devices they produce per year. The price of the scroll wheels are given below. It costs approximately P475 to prepare an order and receive it, and carrying costs are 25 percent of purchase price per unit on an annual basis. Detemine the optimal order quantity and the total annual cost. Range Unit Price H 1 to 399 25 .25(25) = 6.25 400 to 699 23 .25(23) = 5.75 700 to 999 20 .25(20) = 5 1000 or more 17 .25(17) 4.25

5. Quantity Discount Model Suntech Manufacturing Company uses 5,300 scroll wheels for the mouse devices they produce per year. The price of the scroll wheels are given below. It costs approximately P475 to prepare an order and receive it, and carrying costs are 25 percent of purchase price per unit on an annual basis. Detemine the optimal order quantity and the total annual cost. Range Unit Price H 1 to 399 25 .25(25) = 6.25 400 to 699 23 .25(23) = 5.75 700 to 999 20 .25(20) = 5 1000 or more 17 .25(17) 4.25

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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David’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimatesthat the demand for the salamis is pretty steady at 175 per month. The salamis costGold $1.85 each. The fixed cost of calling his brother in New York and having thesalamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelfspace of 3 percent of the value of the item, and a cost of 2 percent of the value fortaxes and insurance.b. How many salamis should Gold have on hand when he phones his brother tosend another shipment?
David’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimatesthat the demand for the salamis is pretty steady at 175 per month. The salamis costGold $1.85 each. The fixed cost of calling his brother in New York and having thesalamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelfspace of 3 percent of the value of the item, and a cost of 2 percent of the value fortaxes and insurance.c. Suppose that the salamis sell for $3 each. Are these salamis a profitable itemfor Gold? If so, what annual profit can he expect to realize from this item?(Assume that he operates the system optimally.)
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