Cool Gelato uses various sizes of foam cups. The use of 8oz foam cups is constant throughout the year, and Cool Gelato expects t
o use a total of 35,000 units of 8oz cups in 2017. The cost of ordering and receiving the foam cups from the supplier is $25, regardless of how many is ordered. It takes 3 days for the supplier to deliver the foam cups to Cool Gelato each time without variability. Cool Gelato pays $.50 per cup and estimates its annual holding cost to be 25% of its wholesale value. Cool Gelato will operate 350 days in 2017. Answer the following questionsa. What is the economic order quantity for the 8oz foam cups? The EOQ should be an integer value. b. How many times does Cool Gelato need to place orders in 2017 if they use the EOQ? c. How much inventory does Cool Gelato need to hold on average if they use the EOQ? d. How much would the total annual cost for the 8oz cups be if they use the EOQ? e. What is the reorder point (ROP)?
1 answer:
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Answer:
11.14%
Explanation:
Blume's formula is used to combine both arithmetic and geometric returns. This is because using arithmetic growth rate exclusively would be overly optimistic for longer time horizons and on the other hand, using geometric growth rates exclusively would be overly pessimistic for short time horizons.
Using the attached formula, plug in the given numbers;
R(T) would be the sale growth rate we need to calculate.
R(T) =
R(T) =0.0257 + 0.0857
R(T) = 0.1114 as a decimal
Therefore, the forecast sales growth would be 11.14%
