Through its online accessory store, Gateway sells its own products, as well as products made by other companies. One of these products is the WB150 Wolf Byte laptop computer:

a. (*) What is the economic order quantity for the laptops? Calculate annual ordering costs and holding costs (ignoring safety stock) for the EOQ.

b. (**) What is the reorder point for the laptops? How much of the reorder point consists of safety stock?

c. (**) Suppose Gateway decides to order 64 laptops at a time. What would its yearly ordering and holding costs (ignoring safety stock) for the monitor be?

 d. (**) Because computer technologies become obsolete so quickly, Gateway is thinking about raising holding costs from 40% of item cost to some higher percentage. What will be the impact on the economic order quantity for laptops? Explain why.

For parts e and f, use the following formula to consider the impact of safety stock (SS) on average inventory levels and annual holding costs:

e. (***) What is the annual cost of holding inventory, including the safety stock? How much of this cost is due to the safety stock?

 f. (***) Suppose Gateway is able to cut the lead time to a constant 1 week. What would the new safety stock level be? How much would this reduce annual holding costs?

"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"
Looking for a Similar Assignment? Our Experts can help. Use the coupon code SAVE30 to get your first order at 30% off!

Hi there! Click one of our representatives below and we will get back to you as soon as possible.

Chat with us on WhatsApp