Firm CFT is trying to determine the optimal amount of a particular inventory ite

Question

Firm CFT is trying to determine the optimal amount of a particular inventory item to carry in its warehouse. CFT tends to sell 1,050 units a year, with each unit costing $1,100 and an additional carrying cost of $300.

How many units should CFT optimally hold in its inventory? Round the answer to two decimal places. ______

The supplier will only ship 100 units at a given time. Consequently, CFT wants to manage its carrying cost to accommodate this constraint. What carrying cost would make 100 units the optimal quantity? Round your answer to the nearest dollar.
$____

CFT finds that it can only reduce carrying cost to $243. What per unit cost would make 100 units the optimal amount to hold in inventory? Round your answer to the nearest dollar.
$______

Would it make sense for CFT to negotiate with its supplier for this price? Yes or No

Explanation / Answer

Firm CFT is trying to determine the optimal amount of a particular inventory item to carry in its warehouse. CFT tends to sell 1,050 units a year, with each unit costing $1,100 and an additional carrying cost of $300.

How many units should CFT optimally hold in its inventory? Round the answer to two decimal places. 1050*20% =210 units and carrying cost = $63000

The supplier will only ship 100 units at a given time. Consequently, CFT wants to manage its carrying cost to accommodate this constraint. What carrying cost would make 100 units the optimal quantity? Round your answer to the nearest dollar.
$(300 * 100) = $30000

CFT finds that it can only reduce carrying cost to $243. What per unit cost would make 100 units the optimal amount to hold in inventory? Round your answer to the nearest dollar.
$(243 * 100 ) = $24300

Would it make sense for CFT to negotiate with its supplier for this price?

No, as carrying cost has gone down.

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