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f you use Excel to model businesses, business processes, or
business transactions, this course will change your life. You'll learn how to create tools for yourself that will amaze
even you. Unrestricted use of this material is available in two ways.
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Be sure to check the list of worksheet functions that are needed for the homework assignments, to see which new functions (if any) might help with this one.
For a quick way to copy homework problem data into your homework solution, see "Avoid retyping homework problem data."
Since macros are not permitted in this homework assignment, be certain that your workbook has no macros.
Remember that some problems are slight extensions of what we show you in demonstrations and the session notes, and some problems are somewhat ambiguous. This is intended to parallel what you'll frequently encounter at work. If you feel a bit confused, there are some things you can do to help clarify things.
Before attempting this homework, you might find it helpful to read about:
Numbers at the left in square brackets indicate point values.
The
regional warehouse of a fast food chain, Kansas Fried Chicken, orders buckets for its fried chicken every
four months. Demand for fried chicken is constant, requiring 150 cases per month. A case of
buckets costs $21.30. Assume that inventory is 0 on December 31, and that the first order is received on
January 1. Assume also that you receive each new order at exactly the moment that your inventory is depleted.
Find the inventory of chicken buckets, measured in cases, at the beginning of each month of a twelve-month year.
Kansas Fried Chicken estimates that it spends $91 when it places an order for chicken buckets, and that the cost of maintaining inventory is approximately 25% of its average inventory investment on an annual basis.
Compute the economic order quantity in cases.
KFC has negotiated a deal with its paper supplier which gives KFC a quantity discount on its per order purchases of chicken buckets. The price schedule below shows the price per case of buckets as a function of the number of cases ordered:
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Assuming that the cost to order is $91 and that the cost to hold is 25% per year, compute the optimum order quantity. Note that the optimum order quantity might be different from the Economic Order Quantity.
How much would be lost or saved annually by each discount option compared to the EOQ strategy for each price range?
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Last Modified: Wednesday, 22-Oct-2008 05:31:20 EDT