Assignment:
Quantative Methods
Ross' machine shop uses 2500 brackets during a year with usage being constant and 250 working days per year, the brackets are purchased for $15, or they can be purchased in lots of 1000 for $14.50, though the lead time for larger orders is 3 days, compared to 1 day for any sized order. The ordering cost is $18.75 per order. The holding cost is 10% of the unit cost.
a. What is the total cost for both options?
b. Given the two options, what is your recommendation to Ross?
c. What is the ROP of your recommendation?