Sam Company is a retailer of real wood flooring. It buys and sells 20,000 packs of flooring each year from its supplier

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Sam Company Is A Retailer Of Real Wood Flooring It Buys And Sells 20 000 Packs Of Flooring Each Year From Its Supplier 1 (73.49 KiB) Viewed 32 times

Sam Company is a retailer of real wood flooring. It buys and sells 20,000 packs of flooring each year from its supplier Frank Company. The real wood flooring from Frank Company costs OMR 35 per pack. There is an order processing charge of OMR 150 per order, irrespective of the number of packs ordered, and Frank Company takes 10 days to deliver the wood flooring. The average cost of holding one pack of real wood flooring for one year is OMR 9. Now, Sam Company has another option from Dona Company. A new supplier of real wood flooring, Dona Company, has offered Sam Company wood flooring on slightly different terms. Dona Company guarantees that its wood will never arrive damaged since it uses special packaging designed for maximum protection. It charges OMR 34.95 per pack for the flooring. There is an order processing charge of OMR 160 per order, irrespective of the number of packs ordered, and Dona Company takes 7 days to deliver the goods. The average cost of holding one pack of Dona Company real wood flooring for one year is OMR 12. This is because of special packaging takes up additional storage space. 1. Under the current arrangement with Frank Company determine the economic order quantity for packs of wood flooring. 2. How many orders need to be placed in a year from Frank Company to get the optimal ordering cost? 3. What would the holding cost of the Frank Company for the year? 4. Under the new suppliers arrangement with Dona Company determine the economic order quantity for packs of wood flooring. 5. How many orders need to be placed in a year from Dona Company to get the optimal cost? 6. What would the holding cost of the Dona Company for the year? 7. What will be the total cost of holding and ordering the wood flooring for one year under Dona company arrangements? 8. What will be the total cost of holding and ordering the wood flooring for one year under Frank Company arrangement?