Anderson Supply Company sells windows and French doors.Its most popular French door model is a six foot unit, which it purchases from Marvel doors.The units cost Anderson $500 each and sell for $700 each.Anderson uses a 22% annual holding cost rate and the cost of placing an order with Marvel for the doors is $200.If Anderson runs out of stock of doors it estimates that it incurs a goodwill cost of $15 per unit for each week a customer must wait for the door.The fixed administrative cost to process a backorder isestimated to be $5.Anderson sells an average of 30 units per week and the lead time for delivery of the doors is approximately two weeks.
A.Determine the optimal order quantity and reorder point for the doors.
B.Approximately what percentage of customers will have to wait for their units?

Question

Anderson Supply Company sells windows and French doors.Its most popular French door model is a six foot unit, which it purchases from Marvel doors.The units cost Anderson $500 each and sell for $700 each.Anderson uses a 22% annual holding cost rate and the cost of placing an order with Marvel for the doors is $200.If Anderson runs out of stock of doors it estimates that it incurs a goodwill cost of $15 per unit for each week a customer must wait for the door.The fixed administrative cost to process a backorder isestimated to be $5.Anderson sells an average of 30 units per week and the lead time for delivery of the doors is approximately two  weeks.
A.Determine the optimal order quantity and reorder point for the doors.
B.Approximately what percentage of customers will have to wait for their units?

Quizplus · Accepted Answer

The Answer of Anderson Supply Company sells windows and French doors.Its most popular French door model is a six foot unit, which it purchases from Marvel doors.The units cost Anderson $500 each and sell for $700 each.Anderson uses a 22% annual holding cost rate and the cost of placing an order with Marvel for the doors is $200.If Anderson runs out of stock of doors it estimates that it incurs a goodwill cost of $15 per unit for each week a customer must wait for the door.The fixed administrative cost to process a backorder isestimated to be $5.Anderson sells an average of 30 units per week and the lead time for delivery of the doors is approximately two  weeks.
A.Determine the optimal order quantity and reorder point for the doors.
B.Approximately what percentage of customers will have to wait for their units?

Anderson Supply Company Sells Windows and French Doors