The Schubert Company is a small manufacturing company that uses gear assemblies to produce four different models of mountain bikes. One of these gear assemblies, the “Smooth Shifter”, is used for the two most expensive of Schubert’s four models, and has an estimated annual demand of 300 units. Schubert estimates the cost to place an order is $40, and the holding cost for each assembly is $60 per year. The company operates 250 days per year. The purchasing manager decides that, in order to save purchasing time, orders for the Smooth Shifter will be placed once a month, or twelve times per year. How much does this approach cost Schubert in total annual holding and ordering costs (instead of Schubert ordering using the EOQ quantity?

Question

Answer

More than $500

Answer

Less than or equal to $50

Answer

More than $50 but less than or equal to $200

Answer

More than $200 but less than or equal to $500

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The Schubert Company is a small manufacturing company that uses gear assemblies ...

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