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Peter runs a mail-order business for gym equipment from his facility in Ponce. Annual demand for the PuertoFlexers (the best seller) is 25,000 in the US. Assume that the year has 360 days. He sells each product for $350, earning a markup of 20%, including shipping and handling to the US. The annual holding cost per unit is $5.50 and the cost to process an order is $25. It takes ten days to completely process an order. Please answer the following questions:

Please write down any assumption that you have to make to answer the following questions:

a. What is the cost of each unit in order to get the 20% markup earning?

b. What is the EOQ of this situation?

c. What is the Total Cost of this situation?

d. How long does a cycle time last?

e. If Peter has space for 565 products, can all be stored in his facilities?

f. If Peter expect demand to rise 15% next year, does he has to make any arrangements?

Please provide the assumptions necessary to provide the answers to each of the 6 questions above.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91620931

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