Customers at Joe’s Office Supply Store demand an average of 6,000 desks per year. Each time an order is placed, an ordering cost of $300 is incurred. The annual holding cost for a single desk is 25%...

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Customers at Joe’s Office Supply Store demand an average of 6,000 desks per year. Each time an order is placed, an ordering cost of $300 is incurred. The annual holding cost for a single desk is 25% of the $200 cost of a desk. One week elapses between the placement of an order and the arrival of the order. In parts (a)–(d), assume that no shortages are allowed.


a Each time an order is placed, how many desks should be ordered?


b How many orders should be placed each year?


c Determine the total annual costs (excluding purchasing costs) of meeting the customers’ demands for desks.


d Determine the reorder point. If the lead time were five weeks, what would be the reorder point? (52 weeks = one year.)


e How would the answers to parts (a) and (b) change if shortages were allowed and a cost of $80 is incurred if Joe’s is short one desk for one year?



Answered Same DayDec 24, 2021

Answer To: Customers at Joe’s Office Supply Store demand an average of 6,000 desks per year. Each time an order...

David answered on Dec 24 2021
112 Votes
Customers at Joe’s Office Supply Store demand an average of 6,000 desks per year. Each time an
ord
er is placed, an ordering cost of $300 is incurred. The annual holding cost for a single desk is
25% of the $200 cost of a desk. One week elapses between the placement of an order and the
arrival...
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