Should jane begin ordering 600 or more cases at a time

Assignment Help Business Management

Reference no: EM131843283

After Jane graduated from Singapore Management University, she began her career as inventory manager for one local beer distributor call ABCWerks in Singapore.

In OM class, she acquired the knowledge of economic order quantity formula to compute the optimal order sizes. Currently, she is placing orders from ABCWerks's supplier, Asia Pacific Brewery. Each order placed with AP Brewery costs $10 that includes labor, forms postage, and so forth.

a. Jane finds that her company sells on average 100 cases a week of regular 12-oz Tiger beer where demand is constant over a 50-week year. For every two weeks, she places an order with APB at a cost of $8 per case. The inventory-related holding cost (capital, insurance, etc) for her company equals 25% of the dollar value of inventory per year.

If Jane applies EOQ formula, what is the order quantity that minimizes her company's total inventory-related costs i.e., holding and ordering? What is her company's inventory turns per year? What is the inventory-related cost per case of beer sold?

b. Assume that AP Brewery is willing to give a 5% quantity discount if the distributor orders 600 cases or more at a time. If the company is interested in minimizing its total cost (i.e., purchase and inventory-related costs), should Jane begin ordering 600 or more cases at a time?

Reference no: EM131843283

Questions Cloud

What are some of the issues relevant to forecasting : What are some of the issues relevant to forecasting with multiple regression models?Just because a multiple regression model is statistically significant.

What are demand-related and supply-related reasons : What are demand-related and supply-related reasons why the equilibrium price of automobiles would rise.

Review problem on business model canvas : A Business Model Canvas is a one page summary. It's basically a one business plan. For the final project in this course, you are to develop a business model.

Why do you think starbucks increased its prices : Why do you think Starbucks increased its prices by 1%, and do you believe that this action is risky, or a safe bet?

Should jane begin ordering 600 or more cases at a time : After Jane graduated from Singapore Management University, she began her career as inventory manager for one local beer distributor call ABCWerks in Singapore.

List me the some numbers for the graph : The consumer utility function is given by U(X,Y)=5X+4Y and the given bundle is X=4 and Y=10

What are the dynamics of h and ph in each given region : What are the dynamics of H and pH in each region of the resulting diagram? Sketch the saddle path. Why is the H?= 0 locus not horizontal in this mode?

The design phase assessment should be design at point of : Speculate on why there was a disconnect between the review of daily lessons and the exam content.

Discuss the benefits of aligning hrm activities : A common theme observed in modern organizations today is the poor alignment of business strategy and HRM strategy.

User Account

All Pages