Question 1:

Case: Rochester Manufacturing’s Process Decision – 10 marks

Calculations: Answer all the questions

Question 2:

 

Shoeless Joe is a specialty retailer that is deciding where to locate a new facility. The annual fixed and variable costs for each possible site have been estimated as follows: (15 marks)

Location Fixed Costs € Variable Costs €
A 70,000 2.5/unit
B 36,000 5.5/unit
C 20,000 8.5/unit
D 50,000 4.5/unit

 

  1. Perform an analysis of the volume over which each location is preferable.
  2. If demand is expected to be 2250 units, which location is best?
  3. How does your answer change if B’s fixed costs increases by 10%?

 

Question 3:

 

Given the following list of items:

  • Calculate the annual usage cost of each item. (2.5 marks)
  • Classify the items as A, B, or C. (7.5 marks)

 

Item Annual Demand Ordering cost ($) Holding Cost ($)  Unit Price ($)
101 500 15 25 0.50
102 1500 10 30 020
103 5000 25 30 1.00
104 250 15 25 4.50
105 1500 35 35 1.70
201 10000 25 20 0.75
202 1000 10 20 1.35
203 1500 20 25 0.25
204 500 40 25 0.80
205 100 10 15 2.50

 

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