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Questions: You own a local hardware store. Your store typically sells 1200 pounds of 7D galvanized nails a month. You normally buy the nails FOB at your store for $1.99 per pound and sell them at $2.99 a pound delivered on a monthly basis. However, the manufacturer of the nails has told you that they currently have a special sale and will give you an 8% discount on the galvanized nails. You know that it costs you $40 to make an order with the company. You also know that your inventory carrying cost is 24%.
1. Based upon this information, should you make a normal monthly order or a special discount order? Why?
2. What size should the order be? Show all calculations.
3. Based upon this analysis, when will you need to make your next order?
4. Even if you choose to still order monthly, explain two (2) benefits and two (2) concerns that you might have with making a one-time special buy for the galvanized nails. The assignment should be typed.
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