Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
Bartleby Related Questions Icon

Related questions

Question

Henri of Henri’s French Cuisine (HFC), a chain of twelve
restaurants, is trying to decide if it makes sense to outsource the
purchasing function. Currently, Henri employs two buyers at an
annual fi xed cost of $85,000. Henri’s estimates that the variable
cost of each placed purchase order is $15. Value-Buy (VB), a group
of purchasing specialists, will perform the purchasing function
for a fi xed annual fee of $100,000 plus $5 for each purchase order
placed. Last year, HFC placed 1450 purchase orders.
(a) Construct a base-case spreadsheet model that shows both
of these alternatives side-by-side. Use the same number of
orders (stored in a single cell) to drive the calculations.
(b) Using last year’s quantity of purchase orders, which
alternative would have been the better?
(c) Use Goal Seek to fi nd the indiff erence point (where total
costs are equal) between these two alternatives. (Hint: Goal
Seek can work only with a single “Set cell.” Create a cell in
your model that computes the diff erence between the total
costs of the two alternatives before running Goal Seek.)
(d) Construct an XY chart of total cost versus quantity. Graph
both alternatives on the same chart. Use a Data Table to
generate the values for the chart. (Hint: Th e Data Table
will need to track two output values: the total costs of
the two alternatives. When setting up the Data Table, it
will simply have an additional column, compared to the
example presented in the text.)

Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Operations Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Text book image
Operations Management
Operations Management
ISBN:9781259667473
Author:William J Stevenson
Publisher:McGraw-Hill Education
Text book image
Operations and Supply Chain Management (Mcgraw-hi...
Operations Management
ISBN:9781259666100
Author:F. Robert Jacobs, Richard B Chase
Publisher:McGraw-Hill Education
Text book image
Business in Action
Operations Management
ISBN:9780135198100
Author:BOVEE
Publisher:PEARSON CO
Text book image
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Text book image
Production and Operations Analysis, Seventh Editi...
Operations Management
ISBN:9781478623069
Author:Steven Nahmias, Tava Lennon Olsen
Publisher:Waveland Press, Inc.