Matthew Liotine‘s Dream Store sells beds and assorted supplies. His best-selling bed has an annual demand of 400 units.Ordering
cost is $40; holding cost is $5 per unit per year.a) To minimize the total cost, how many units should be ordered each time an order is placed?b) If the holding cost per unit was $6 instead of $5, what would be the optimal order quantity?
1 answer:
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Given the above stated information, the the correction options is C. Three year loan costs less than 4 year loan.
<h3>What is a the calculations justifying the above answer?</h3>The computation is executed using excel. Here is the explanation for same:
- There are two loan choices available. We must calculate the total payments for both alternatives and choose the one with the lowest cost.
- The first option is to pay $193.60 per month with 10% interest for 3 years.
- The second option is to pay $158 per month for four years at 12% interest.
- Total cost for option 1 is $969.60.
- Total cost for option 2 is $1584.00.
Hence from
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