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Concept explainers
An importer buys items in bulk from abroad and sells them on to the local population with a fast delivery time. They receive orders for 250 items per month.
It costs £30 to have a shipment of new stock delivered, which takes 1 month to arrive after being ordered. Storing each item costs 10p per month.
(a) Find the optimal order size and order frequency for the importer to minimise their costs. Justify your answer
(b) The seller realises that the demand each month varies, and can be seen as
(c) They decide to create a buffer stock such that the probability of running out of stock is at most 1%. By what percentage does this increase the importers operating costs?
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- The cash discount is 1. the most common industry discount 2. given to the special vendors 3. Is given when they purchase a large quantity 4. given when the delivery is accepted earlyarrow_forward26 Which of the following statements is true with regard to cycle stock? a It is also called surplus stock. b It is received from a downstream supply chain partner. c It is seasonal in nature d It is also referred to as base stock. 27 Inventories that are in transit in containers or trucks ______. a are known as pipeline inventories b are known as in-house inventories c are relatively small in global supply chain (as compared to domestic supply chains) d are known as en route inventoriesarrow_forwardPlease Show EVERY Working VERY Clearly! Calculate the Economic Order Quantity, Total Annual Cost, Reorder Point, and ADDITIONAL Annual Cost (using a GRAPH) if the Procurement Manager increase the order quantity by 25% from the above EOQ.arrow_forward
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