Answer in Financial Math for Kelisa Williams #275410
The sale of the shoe brand has risen exponentially. One particular shoe store has been experiencing a shape increase in sales and has just hired a graduate, Mr. Perry as Manager. The demand for the brand shoes is 150 boxes per month. Each box cost $ 12,000. The annual holding cost rate is 13%. The particular shoe store ordering cost is $4,300 and the store and warehouse are opened 312 days per year. The lead time for each order is a long 20 days since the shoes are coming all the way from England.
- How many boxes of shoes do you recommend that Mr. Perry orders every time he places an order?
- Determine the estimated holding cost; and ordering cost.
- Would it be true to say it takes Mr. Perry almost 55 days between orders? (Justify your answer.)
- How many orders will Mr. Perry have placed each year?
- Determine the reorder point.
- What can Mr. Perry expect his Total Annual cost to be?
1.Since the lead time for each order is 20 days, I recommend ordering 300 boxes.
2.Order cost:
“4300times2=8600”
Storage cost:
“4300times2+12000times300=3 608 600”
3.Yes, it looks like a real deadline, since the 20 is the deadline for the order and also the delivery of the goods.
4.“frac{312}{55}=5.67”
6 orders will Mr. Perry have placed each year
5.“Reorder Point = Normal consumption during lead-time + Safety Stock=150+150=300”
6.“Total Annual cost=12000times6times150+4300times6+0.13(12000times6times150+4300times6)=10u00a0825u00a0800+1u00a0407u00a0354=12u00a0233u00a0154”
