1. A shop sells animal dolls at a very steady pace of 10 per day, 310 days per year. The wholesale cost of the dolls is $5, and the -gift shop uses an annual interest rate of 20 percent to compute holding costs. a. If the shop wants to place an average of 20 replenishment orders per year, what order quantity should it use? b. If the shop orders dolls in quantities of 100, what is the implied fixed order cost? c. If the shop estimates the cost of placing a purchase order to be $10, what is the optimal order quantity?
1. A shop sells animal dolls at a very steady pace of 10 per day, 310 days per year. The wholesale cost of the dolls is $5, and the -gift shop uses an annual interest rate of 20 percent to compute holding costs. a. If the shop wants to place an average of 20 replenishment orders per year, what order quantity should it use? b. If the shop orders dolls in quantities of 100, what is the implied fixed order cost? c. If the shop estimates the cost of placing a purchase order to be $10, what is the optimal order quantity?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:1. A shop sells animal dolls at a very steady pace of 10 per day, 310 days per
year. The wholesale cost of the dolls is S5, and the -gift shop uses an annual
interest rate of 20 percent to compute holding costs.
a. If the shop wants to place an average of 20 replenishment orders per year,
what order quantity should it use?
b. If the shop orders dolls in quantities of 100, what is the implied fixed
order cost?
c. If the shop estimates the cost of placing a purchase order to be S10, what
is the optimal order quantity?
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