Assume Fisher Food Products is thinking about 3 different size offerings for the issuance of additional shares
Size offer Public Price Net to Corporation
a. 1.6 million $40 $36.70
b. 6.0 million 40 37.28
c. 25.0 million 40 38.12
What is the percentage underwriting spread for each size offer?
What principle does this demonstrate?
a) Spread = $40 - $36.70 = $3.30
Percentage underwriting spread = 3.30/40=8.25%
b) Spread = ...
A comparison to quantity discount is made.
Operations Management Inventory Quantity Discounts
Please show your calculations and round to FOUR decimal places.
A retailer needs to choose between two suppliers for one of its products. The only criterion used for the decision is the cost. The following information about the product is available:
Demand 200 a week
Ordering cost (for all suppliers) $75 per order
Holding cost 20% of the unit cost
Working weeks 50 a year
The retailer has narrowed down the choices to two suppliers. The following shows the price-break schedule for each supplier:
SUPPLIER A SUPPLIER B
Quantity Unit Price Quantity Unit Price
1-299 $14.00 1-249 $14.10
300-699 13.80 250-449 13.90
700+ 13.60 450+ 13.70
A. Which supplier should the retailer choose? Explain and support your answer with appropriate calculations.
B. What is the optimal lot size for the item? (Note: There has to be only ONE choice, regardless of supplier).
C. What is the total annual cost of inventory for the chosen (best) lot size?