ted demand for one particular product they sell is 9,000 units per 13. A year re
ID: 350193 • Letter: T
Question
ted demand for one particular product they sell is 9,000 units per 13. A year retail store operates 360 days per year. Forecas Two suppliers for this product are possible, and each supplier will allow orders of 150 units or 250 units Annual Annual freight cost Lead time (days)administrative cost Price Annual carrying Supplier pe runit cost per unit 150 units/order | 250 units/order L $70,000 $60,000 6 $40.00 $41.00 $8.00 $8.20 $30,000 $30,000 $25,000 $20,000 Total costs for Supplier A are: $461,800/year with 150 units/order, or $ 457,200/year with 250 units/order. Which supplier and order option is best? (C) Supplier B; 150 units/order (B) Supplier A; 250 units/order. (E) Orders of 250 units from either supplier (A) Supplier A; 150 units/order (D) Supplier B; 250 units/order A firm had plans to procure 75,000 pounds of copper on 14 June, 2017. In order to fix the price, they entered into a t tures contract for 75,000 pounds at $2.50 per pound. Today, the market price for copper is around $2.60 per pound, but it turns out that the firm only needs to purchase 70,000 pounds of copper. Which of the following statements is correct? (A) Financial result is negative, physical result is positive, sum of results is zero (B) Financial result is positive, physical result is negative, sum of results is positive C Financial result is negative, physical result is positive, sum of results is positive D) Financial result is positive, physical result is negative, sum of results is negative (E) Financial result is negative, physical result is positive, sum of results is negative nual quantity needed for a part is not yet known. Costs for making the part () or outsourcing production to fi can charge, in order to ensure O, will never be best? (For any specific quantity, the option with lowest total cost is best.) 15. The ann appear below. Another outsourcing option, firm O2, has variable cost $15/unit. What is the maximu m fixed co Option Variable cost per unit | Annual fixed cost $10 $12 $40,000 $30,000 AnswerExplanation / Answer
13.
Total cost for supplier A with 150 units/order = 9000*40+(150/2)*8+30000+70000+9000*(6/360)*8 = $ 461,800
Total cost for supplier A with 250 units/order = 9000*40+(250/2)*8+25000+70000+9000*(6/360)*8 = $ 457,200
Total cost for supplier B with 150 units/order = 9000*41+(150/2)*8.2+30000+60000+9000*(3/360)*8.2 = $ 460,230
Total cost for supplier B with 250 units/order = 9000*41+(250/2)*8.2+20000+60000+9000*(3/360)*8.2 = $ 450,640
The best supplier order option is :
(D) Supplier B; 250 units/order
14.
Financial result = Current market price - futures contract price = 2.6-2.5 = 0.1 . This is positive.
Physical result = 70000 - 75000 = -5000 (negative)
Sum of results = 75000*2.5 - 70000*2.6 = 5500 (positive)
(B) Financial result is positive, physical result is negative, sum of results is positive
15.
Crossover point between I and O1 = (Fixed cost of I - Fixed cost of O1)/(Variable cost of O1 - Variable cost of I) = (40000-30000)/(12-10) = 5000
For 5000 units, Total cost of O1 = Fixed cost+ Variable cost*Volume = 30000+12*5000 = 90000
In order that I will not choose O1, the total cost of O2 for volume upto 5000 units must not be more than the total cost of O1 for this volume. Beyond this volume, neither O1 nor O2 will make economic sense, because I will be cheaper than both.
Therefore, maximum fixed cost of O2 = Total cost - Variable cost*Volume = 90000 - 15*5000 = $ 15,000
The maximum fixed cost that O2 can charge = $ 15,000
ANSWER: 15000
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