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bija089 [108]
3 years ago
6

A small manufacturing firm uses roughly 3400 pounds of chemical dye a year. Currently the firm purchases 300 pounds per order an

d pays $3 per pound. The supplier has just announced that order of 1000 pounds or more will be filled at a price of $2 per pound. The manufacturing firm incurs a cost of $100 for each time it submits an order and assigns an annual holding cost of 17 percent of the purchase price per pound. Determine the order size that will minimize the total cost. (enter answer in pounds with no decimal)
Business
1 answer:
kupik [55]3 years ago
6 0

Answer:

Consider the following calculations

Explanation:

First calculate the Economic Order Quantity (EOQ) ignoring the discount.

Economic Order Quantity (EOQ)= √ (2DS/H)

D- Demand per year= 3400 pounds

S- Ordering cost per year= $100

Per unit cost= $3 per pound

H- Holding (carrying) cost per unit per year=$0.51( 17% of purchase price)

So by applying the above formula, we get the following answer:

EOQ= SQRT (2*3400*100/0.51)= 1154.70 units

Economic Order Quantity (EOQ)= 1154 units

Discounted Order Quantity (DOQ) = 1500 units

Annual Orders under EOQ = Demand ÷ EOQ = 3400 ÷ 1154 = 3 orders

Annual Orders under DOQ = Demand ÷ DOQ = 3400÷ 1500 = 2.40 or 3 orders

Average Inventory under EOQ = EOQ ÷ 3 = 1154 ÷ 3 = 384.90 units

Average Inventory under DOQ = DOQ ÷ 3 = 1500 ÷ 3 = 500 units

A-Saving from reduction in Price

= Demand × Full Price × Discount Rate

= 3400× 3 × 0.33 = $ 3366

B-Saving from reduction in orders

= Orders reduced × Order Cost

= (3− 3) × 100 = 0

C-Increase in holding cost

= Increase in average inventory × holding cost per unit per annum

Holding cost is 17% of purchase price

So for 500 units it is=$170 (17% of $2 per pound)

For 384.90 units= $196.30 (17% of $3 per pound)

Increase in holding cost= 170-196.30= $-26.30

Net savings on discount order quantity = A + B − C = 3366 + 0 – (-26.30) = $3392.30

Since the net effect on income is positive, the store should place the order for quantity discount.

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For each of the following scenarios, please decide whether there will be an increase or decrease in short-run aggregate supply,
algol13

Answer:

1.short run aggregate supply decreases

2.short run aggregate supply decreases

3.short run aggregate supply increases

Explanation:

The short run aggregate supply is the total production of goods and services in an economy holding some factors of production fixed.

1. Even in a healthy economy. As the natural rate of unemployment increases, short run aggregate supply decreases.

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antoniya [11.8K]

Answer:

The question is incomplete; the complete question is given below.

                        Selling Price per unit Variable  cost per unit

Product                                     $                                  $

Snowboards                           20.00                       170.00

Skis                                  400.00                          225.00

Poles                                      50.00                 20.00

Salvador's contribution margin is  46.2%

Explanation:

Contribution is the amount generated from the sales of a product to cover part of the total fixed cost.

Contribution is an important concept in decision making because it helps to determine the profitability of individual products where a set of products benefit from the same fixed cost. <em>it </em><em>helps in prioritizing the allocation of resources to different products based on their profitability</em> .

Contribution per unit = Selling price per unit- variable cost per unit

Total contribution= Contribution per unit * units sold

Contribution margin ration: The proportion of sales realised as contribution is known as contribution margin ratio (CMR) . It represents the amount generated as contribution from every one dollar worth of sales.  A 60% margin means that $60 is made as contribution from evry sales of $100, for example.

It is a calculated as follows:

Single-product scenario:

C.M.R= contribution per unit/ selling price per unit

Multiple-products scenario:

C.M.R= contribution from a mix / revenue from a mix

We shall use the multiple-products formula

                                         Snowboard                 ski             Poles     Total

                                                   $                             $                $

Selling price                              320                     400                50

variable cost                        <u>    (170)                      (225)              (20)</u>

Contribution per unit (SP-VC)   <u>150                           175                30</u>

Cont from a mix (cont× unit)   1050                       525                 60

Revenue from a mix (SP× unit) 2240                    1200               100

Contribution margin ratio= Cont. from a mix/ Rev from a mix

                                           = (1050+525+60)/(2240+1200+100)

                                           =(1635 /  3540) × 100

                                            = 46.2 %

8 0
3 years ago
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