9) Video Images is a distributor of DVDs. Quick-Disk Mart is a local retail outl

Question

9) Video Images is a distributor of DVDs. Quick-Disk Mart is a local retail outlet which sells blank and recorded DVDs. Quick-Disk Mart purchases tapes from Video Images at $3.00 per DVD. DVDs are shipped in packages of 20. Video Images pays all incoming freight, and Quick-Disk Mart does not inspect the DVDs due to Video Images reputation for high quality. Annual demand is 104,000 DVDs at a rate of 4,000 DVDs per week. Quick-Disk Mart earns 20% on its cash investment Tr u chase order lead time stwowweeks. The following cost data are available: what are the amwal Relevant ordering costs per purchase order Carrying costs per package per year: 90.50 elawam Relevant insurance, materials handling breakage, etc., per year $450hat are th relevank What is the required annual return on investment per package? Cos A) $12.00 B) $60.00 C $0.60 D) $2.50 er the following questions using the information below: er l Goods is a distributor of DVDs. DVD Mart is a local retail outlet which sells blank and recorded DVDs. DVD Mart

Explanation / Answer

What is the required annual return on investment per package 3*20*0.2 Ans A 12 b annual relevant ordering costs = number of purchase orders per year (D/Q) x relevant ordering cost per purchase order No. of order per year = 104000/239 =435 90.5*435 39367.50 c EOQ = The square root of [(2 × (104,000/20) × $90.50) / ($12+ $4.50)] = 239 *3*20*20% = 12 d Total cost = (Average annual ordering cost) + (average annual carrying) Average annual carrying cost = (average inventory) x (CC per ut) (239/2)*(0.6) 71.7 39367.5+71.7 39439.20 e How many deliveries will be made during each time period (104000/20)/239 21.76

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