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Katyanochek1 [597]
3 years ago
10

Whole Nature Foods sells a gluten-free product for which the annual demand is 5000 boxes. At the moment it is paying $6.40 for e

ach box; carrying cost is 25% of the unit cost; ordering costs are $25. A new supplier has offered to sell the same item for $6.00 if Whole Nature Foods buys at least 3000 boxes per order. Determine the total costs under both scenarios. Should Whole Nature Foods stick with the old supplier, or take advantage of the new quantity discount.
Business
1 answer:
prisoha [69]3 years ago
7 0

Answer:

the answer is =32291.67.

The firm should take the advantage of the new quantity as the total cost is lesser as compared with the  old supplier. the firm can save $340 by approximately taking the advantage of the new quantity discount.

Explanation:

Solution

Given that:

The Annual demand D = 5000 boxes

The Cost C = $6.4 per each box

The Carrying cost H = 25% of the unit cost = 0.25*6.4 = 1.6

The ordering costs S = $25.00

Now,

EOQ =√2DS/H

EOQ =√(2*5000 * 25)/1.6

Thus,

EOQ =Q = 395.28

The Total cost = DC + (Q/2)H + (D/Q)S

= 5000*6.4 + (395.28 /2) 1.6 + (5000/395.28)25

Then,

T = 32000 + 316.23 + 316.23

= 32632.46

So,

The new supplier has offered to sell the same item for the amount of  $6.00 if Q = 3,000 boxes

Hence,

The total cost = 5000 * 6 + (3000/2)1.5 + (5000/3000)25

= 30000 + 2250 + 41.67

= 32291.67

Therefore, The firm should take the  advantage of the new quantity as the total cost is lesser as compared with the  old supplier. the firm can save $340 by approximately taking the advantage of the new quantity discount.

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4 0
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You are analyzing a project with 5-year life. The project requires a capital investment of $10000 now, and it will generate unif
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To calculate the present value you need to use the Net Present Value. The NPV is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

The formula is:

                      n

<h3>NPV= -Io + ∑[Rt/(1+i)^t</h3>

                     t-1

where:

R t​     =Net cash inflow-outflows during a single period t

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In this exercise:

0= -13000

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2= 6000

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5 0
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