Financial Management Individual Work 1 Week 8 Essay

Financial Management Individual Work 1 Week 8 - Essay Example Adding 200 safety units we get 392units. Expected delivery time is 2 weeks hence (392/2) 196 units per week. If the usage remains constant, then the Webster could operate at 4 weeks (392/4) when waiting for delivery of each order. It should be noted the discount has reduced the unit price. The TIC IS $24800 so if the Webster now orders 1000 units at a time, the incremental annual cost become $(24800-20000) = $4800. The 1 per cent on each unit of chip will amount to savings of 0.01$(200)*(5000) = 10000 dollars (Tajbakhsh, 2007). The effective savings is $(10000-4800) = $5200 if the firm accepts the discount which is advised to take. i. The EOQ model can be used at different short constant kind of situations taking into account that the assumptions made in the derivation of the model calls for constant variables. It can therefore be used using the annual rates of each period. 4. The manufacturing trend is skewed to flexibility of designed plants, which give a go ahead in production without incurring high costs of setting up. This immensely reduce inventory holding of final