Construct a financial model to determine the redelivery

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Construct a financial model to determine the redelivery/rehandling cost, lost sales, invoice deduction cost, and net income for the following:

On-time delivery increases from 98% to 99% with a 2% increase in transportation cost.

Order fill rate decreases from 99% to 98% with operating cost remaining constant. Selling price/order = $150/order

Gross profit/order = $35/order Lost sales rate:

On-time delivery failure = 20% Order fill failure = 25%

Annual orders = 200,000

Re handling cost = $100/order

Invoice deduction/service failure = $75/order Transportation cost = $1,000,000

Average inventory = $1,000,000 Interest cost =$1,500,000

Inventory carrying cost rate = 25%/$/year Warehousing cost = $750,000

Other operating cost = $500,000 Cash = $3,000,000

Accounts receivable = $4,000,000 Fixed assets = $30,000,000

Reference no: EM132225075

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