Explore BrainMass
Share

# Fixed Order Quantity Models

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

I know you have to find Economic order quantity to figure this out, but i havent been able to get it right!! The answers are in the brackets after the question.. could you please explain how to get them?? thanks!

Q4) 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.

a) Assuming that Staples determines the order size that minimize its own
cost, what is the total holding and ordering costs in the supply chain?
(30,497)

b) If Office Desk and Staples were integrated what would be the optimal
order size and the total cost? (507, 28,397)

c) 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? (28,397)