Task: I know you have to find Economic order quantity to figure this out:
Question: Staples Office Store purchases computer desks from Office Desk Industries. A desk, on the average, costs $80 dollars to Office Desk and sold to Staples for $200. Currently, the annual demand is 2,400 desks. The fixed ordering costs are $1000 for Staples and $2000 for Office Desk and both companies have a holding cost of 20%. The supply chain is not coordinated and Office Desk ships whatever Staples order.
1) Assuming that Staples determines the order size that minimize its own cost, what is the total holding and ordering costs in the supply chain?
2) If Office Desk and Staples were integrated what would be the optimal order size and the total cost?
3) Suppose that Office Desk is considering coordinating the supply chain in order to minimize the supply chain costs. What would be the total cost in the supply chain as a result?