Adonai Bait & Tackle has been buying a chemical water conditioner for its bait (
ID: 338580 • Letter: A
Question
Adonai Bait & Tackle has been buying a chemical water conditioner for its bait (to help keep its baitfish alive) in an optimal fashion using EOQ analysis. The supplier has now offered Adonai a discount of t 1 off all units if the firm will make its purchases quarterly. Current data for the problem are: D-3600 units per year; S- 12.00, h-15% of the purchase price per year P$25. a. What is the EOQ at the current behavior? b. What is the annual total cost of continuing their current EOQ-based behavior? e wehet s ohe meuedl t e ropocd iscount d. At the cheaper of the two total costs, are carrying costs equal to ordering costs? Explain. e. Should they accept the offer from the supplier?Explanation / Answer
Adonai Bait & Tackle has been buying a chemical water conditioner for its bait (to help keep its baitfish alive) in an optimal fashion using EOQ analysis. The supplier has now offered Adonai a discount of t 1 off all units if the firm will make its purchases quarterly. Current data for the problem are: D-3600 units per year; S- 12.00, h-15% of the purchase price per year P$25. a. What is the EOQ at the current behavior? b. What is the annual total cost of continuing their current EOQ-based behavior? e wehet s ohe meuedl t e ropocd iscount d. At the cheaper of the two total costs, are carrying costs equal to ordering costs? Explain. e. Should they accept the offer from the supplier?