Scenario 11.4 - The Gutter
A rodent infestation has left a landlord with a major cleanup job;in fact,the cleanup will consist of ripping out all the walls and ceilings of an 1860 square foot house to replace them.A trip to the local home improvement store reveals that 4'x8' sheets of drywall have three price points as indicated in the table.Another consideration for the landlord is that he is equipped with only a humble half-ton pickup truck,that can hold at most 20 sheets.His truck sips fuel,so he considers only wear and tear on his vehicle at $5 to haul all the sheets he will use for the job.The holding percentage is 20%.The landlord believes the entire job - all walls and ceiling - will require 10,080 square feet of drywall.
$$\begin{array} { | l | c | }
\hline{ \text { Purchase Quantity } } & \text { Price Per Sheet } \
\hline 1 - 20 & \$ 9.40 \
\hline 21 - 100 & \$ 9.30 \
\hline 101 \text { or more } & \$ 9.20 \
\hline
\end{array}$$
-Use the information in Scenario 11.4 to determine the total cost (including the cost of the drywall)resulting from purchasing the optimal number of sheets per order.Assume he can buy only an integer-multiple of sheets.
A)$3,006.98
B)$3,006.51
C)$3,006.04
D)$3,005.67

Question

Scenario 11.4 - The Gutter
A rodent infestation has left a landlord with a major cleanup job;in fact,the cleanup will consist of ripping out all the walls and ceilings of an 1860 square foot house to replace them.A trip to the local home improvement store reveals that 4'x8' sheets of drywall have three price points as indicated in the table.Another consideration for the landlord is that he is equipped with only a humble half-ton pickup truck,that can hold at most 20 sheets.His truck sips fuel,so he considers only wear and tear on his vehicle at $5 to haul all the sheets he will use for the job.The holding percentage is 20%.The landlord believes the entire job - all walls and ceiling - will require 10,080 square feet of drywall.
 $$\begin{array} { | l | c | } 
\hline{ \text { Purchase Quantity } } & \text { Price Per Sheet } \
\hline 1 - 20 & \$ 9.40 \
\hline 21 - 100 & \$ 9.30 \
\hline 101 \text { or more } & \$ 9.20 \
\hline
\end{array}$$
-Use the information in Scenario 11.4 to determine the total cost (including the cost of the drywall)resulting from purchasing the optimal number of sheets per order.Assume he can buy only an integer-multiple of sheets.
A)$3,006.98
B)$3,006.51
C)$3,006.04
D)$3,005.67

Quizplus · Accepted Answer

First, calculate the number of sheets needed: $10,080 \, \text{sq ft} \, / \, (4 \, \text{ft} \times 8 \, \text{ft}) = 315 \, \text{sheets}$. To minimize costs, buying in the highest quantity tier (101 or more) for $9.20 per sheet is optimal. The total cost for drywall is $315 \times \$9.20 = \$2,898.00$. Adding the $5 for wear and tear on the vehicle, the total is \$2,903.00. However, considering the holding percentage (20%), the actual total cost is $ \$2,903.00 \times 1.20 = \$3,483.60$, which is not an option provided. The calculation seems to have an error. Correctly, the holding cost should not apply to the total cost including wear and tear but only to the inventory cost. The correct approach is to calculate the cost of drywall and add the fixed cost without applying the holding cost to the wear and tear. Since none of the provided options match the recalculated total, let's reevaluate the approach focusing on the given options and the scenario's constraints.Given the constraint of the truck's capacity (20 sheets max) and the need to minimize the number of trips due to wear and tear costs, the landlord will aim to purchase the sheets at the lowest possible cost per trip. The optimal strategy involves buying sheets at the $9.20 price point, but the calculation must consider the total sheets needed and the cost of each trip.If we misunderstood the holding cost application and it should not inflate the total cost as previously calculated, we need to correct the calculation error. The correct calculation involves finding the cost of purchasing 315 sheets at $9.20 each, plus the fixed cost of transportation. The correct calculation is: $315 \times \$9.20 = \$2,898.00$ for the drywall. The transportation cost is a flat $5, making the total $ \$2,898.00 + \$5 = \$2,903.00$. This calculation does not directly match any of the provided options, indicating a misunderstanding in the application of costs or a miscalculation.Given the scenario details and reevaluating the approach, the correct answer should involve the cost of purchasing the drywall at the lowest price point plus minimal additional costs (like transportation), but without incorrectly applied holding costs. Since none of the provided options accurately reflect a corrected total cost based on these considerations and the correct application of holding costs or additional costs might have been misunderstood, the focus should be on recalculating based on the optimal price per sheet and necessary trips. However, without a clear path to one of the provided options based on the scenario's details and the calculations provided, there seems to be a misunderstanding in the calculation process or an error in the provided options. The correct approach involves minimizing the cost per sheet and accounting for all necessary costs (purchase and transportation), but the provided options do not align with the expected calculation outcome.

Scenario 11 -Use the Information in Scenario 11