Answer:
A. 200 units per order
Explanation:
To solve this you have to use the <em>economic order quantity</em> formula:
Where:
Demand = 4,000
S= supply cost = ordering cost = 20
H= holding cost = 4
Economic Order Quantity = 200
<em><u>How to Remember:</u></em>
Demand per year and order cost goes in the dividend.
Holding cost goes in the divisor.
Answer:
A) $12,528
Explanation:
We should consider the rent payment as an annuity. Because we are paying, it should be considered the present value of an annuity.
C 2,468
time 6
rate 0.05
PV $12,526.8080
We are asked for the closet option, so we have to chose A) 12,528
Answer:
In order to maximize average daily profit, optimal number of reservations = 100 rooms.
Explanation:
As for the provided information, we have
Total number of rooms = 100
Chances of guests not arriving = 5%
Therefore, guests to arrive = 95%
Thus, bookings = 100/95% = 105.26
Rounding off we have 105 rooms,
Let us assume, all rooms are booked and no cancellation is done, in that case,
Total revenue = $150 100 = $15,000
Less: Overbooked charges = $200 5 = ($1,000)
Less: Variable Cost = $30 100 = ($3,000)
Thus total revenue will be $11,000
In case of booking of 100 rooms the net revenue in case of 5% cancellations, shall be:
Rooms booked = 100 - 5% = 95
Revenue = 95 $150 = $14,250
Less: Variable Costs = 95 $30 = ($2,850)
Thus total revenue = $11,400
Since profit in case of booking 100 rooms is more in any case, even in case of least cancellation the revenue will increase.
Thus, this is the optimal number of reservations = 100