QUESTION 1 Use the following scenario and data for all questions Keith Shoe Stor

Question

QUESTION 1 Use the following scenario and data for all questions Keith Shoe Stores carries a basic black dress shoe for men that sells at an annual demand of 2000 pairs. Keith's current buying policy is to order 500 pairs each time an order is placed. An order costs Keith $30 to place. The annual carrying cost for each pair over a one year period is 20% of the price of a pair that Keith pays. At the order quantity of 500 pairs, Keith pays the lowest possible unit price of $28 per pair that the supplier could offer. Other quantity discounts offered by the supplier are given in the following table. Quantity Unit Price S32 530 $28 Order Up to 199 200 up to 299 00 and more

Explanation / Answer

Question 7.

Keith shoe store have to make minimum 11 orders to pay $32. Since one order costs $30 to place therefore 11 order costs $(30*11) = $330.

Price of 2000 pairs= $(2000*32)= $64000

And carrying cost = ( 20% of the price of a pair that keith pays) * 2000

= 20*(32/100)*2000

= $12800

Hence, total cost = 330+ 64000+ 12800

= $77130

Question 8

If Keith is willing to pay $30 then Keith have to make minimum 7 orders then total cost

=(30*7)+ {20* (30/100)* 2000}+ (30*2000)

= 210+ 12000+ 60000

=$72210

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