Problemmichigan state figurine inc msf sells crystal, Ask an Expert

Management Studies

Problem

Michigan State Figurine Inc. (MSF) sells crystal figurines to Spartan fans. MSF buys the figurines from a manufacturer for $29 per unit.

They send orders electronically to the manufacturer, costing $39 per order and they experience an average lead time of eight days for each order to arrive from the manufacturer. Their inventory carrying cost is 20 percent.

The average daily demand for the figurines is three units per day. They are open for business 250 days a year. The supplier decides to offer a volume discount. They will sell the crystal figurines at $9 per unit for orders of 375 units or more.

Answer the following questions:

a. How many units should the firm order each time? Assume there is no uncertainty at all about the demand or the lead time.

(Round your answer to the nearest whole number.) Number of units

b. How many orders will they place in a year? Number of orders per year

c. What is the average inventory? Average inventory units

d. What is the annual ordering cost? Annual ordering cost

e. What is the annual inventory carrying cost ?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92760457

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