1. What is the cost difference between Ferguson's proposal to order 4 cases each time and Patrachalski's proposal to order 32 cases each time?
2. Lewin suggested looking at economic order quantity. Based on the lowest total annual cost, what order quantity should Martin recommend?
3. Let's explore the concept of "robustness." Lewin's proposal to use economic order quantity may be unrealistic since SMC would like to place orders in whole cases. If the order quantity is decreased to the nearest whole case (which is a 2.78% reduction) what percent would your total annual cost change? What percent would your annual total cost change if the order quantity is increased to the nearest whole case? Hint: Use the formula ([New Total Cost / Old Total Cost] -1).
4. What would the cost to place an order need to be for Davis to meet his inventory reduction objective if Vice President of Sales Steve Smith achieves his goal to increase sales by 9.6% (HINT: a 10% increase in sales of 100 units results in sales of 110 units).
5. What would the cost to place an order need to be for Davis to meet his inventory reduction objective if Vice President of Sales Steve Smith achieves his goal to increase sales by 9.6% and Financial Comptroller Fred Ferguson achieves his goal of reducing the cost to carry inventory from 32.0% to 29.4%.
6. What would the cost to place an order need to be for Davis to meet his inventory reduction objective if Vice President of Sales Steve Smith achieves his goal to increase sales by 9.6% and Financial Comptroller Fred Ferguson achieves his goal of reducing the cost to carry inventory from 32.0% to 29.4% and Purchasing Director Peter Patrachalski achieves his goal of reducing the average cost per unit by 5.2% (HINT: a 10% reduction in a $10 unit cost results in a $9 unit cost).
7. What would the cost to place an order need to be if Davis implemented a just-in-time approach so ordering 1 unit at a time is the optimal ordering quantity? Use the original variables for part number 64-1909. Your answer must be accurate to six decimal places (e.g. $47.123456)
8. Provide three (3) viable recommendations which would result in a lower cost to place an order. Keep in mind that providing a "viable recommendation" means you must move beyond theoretical statements and be immediately actionable. Do not skimp on your details (but don't make anything up either)...you must indicate how to lower the cost in order to receive full points.