Question: The Harvard Co-op orders sweatshirts with the Harvard University emblem on them and sells them for $50 each. During a typical month, 900 sweatshirts are sold (this includes all styles and sizes ordered from a particular supplier). It costs $25 to place an order (for multiple sizes and styles) and 25 percent to carry sweatshirts in inventory for a year.
a. How many sweatshirts should the Co-op order at one time?
b. The supplier would like to deliver sweatshirts once a week. How much will this cost the Co-op per year? Under what conditions would you agree to the supplier's proposal?
c. Suppose that sales increase to 1500 sweatshirts per month but you decide to keep the lot size the same as in part a. How much will this decision cost the Co-op per year?