Anne Beck recently took over a beauty supply store. Her predecessor always ordered shampoo in quantities of 100 units. Anne is reevaluating this policy. Based on her analysis, the cost to place each order is $35 and the holding cost is $8 per shampoo bottle per year. The annual demand for this product is 2500 bottles. Should Anne change the current order policy and, if so, how much can she save?
I'm not sure my answer is $92
Q=√2x2500x35/8=√21875=148
TC= 2500/148 (35)+ 148/2 (8)= 591+ 592=1183
TC=2500/100 (35)+ 100/2 (8)=875+400=1275
1275-1183=92
2007-06-29 05:33:24 · 5 answers · asked by Anonymous in Science & Mathematics ➔ Mathematics
Predecessor costs were :
25 payments of $35 each = $875
Storage of 100 bottles for 14.6 days at at cost of 8$ per year or 8*14.6/365 = $0.32*100 = 32$ per order = 32*25=$800
So total predecessor costs were 875+800 = $1675.00
Costs = 35x + 20000/x, where x = # of orders/yr.
dC/dx= 35-20000/x^2
35x^2 = 20000
x^2 = 571.4285714
x = 23.9
So if instead of 25 ordering periods, she has 24 ordering periods, she can save $1.66 per yr.
2007-06-29 06:52:59 · answer #1 · answered by ironduke8159 7 · 0⤊ 0⤋
Can you really trust Anne's analysis?
2007-06-29 05:42:50 · answer #2 · answered by Cud_Wick 3 · 0⤊ 0⤋
yea its $92
2007-06-29 05:36:19 · answer #3 · answered by Anonymous · 0⤊ 0⤋
actually its 91.79 but i think thats right
--good question
2007-06-29 05:59:38 · answer #4 · answered by mr.z28 3 · 0⤊ 0⤋
WHAT/////////???????
2007-06-29 05:41:03 · answer #5 · answered by Anonymous · 0⤊ 0⤋