Ask Question
5 July, 21:58

Josh, Inc. is faced with the choice of either producing a newly designed product, XX-30, to stock in anticipation of demand or to customer order. The demand for the product is expected to be 5,000 units per week. Josh decided to produce XX-30 in lots of 500 units. The cost of holding the average unit in inventory per year is $50 times the average inventory level. If Josh, Inc. produces to order, it must discount its unit price on all sales $5 for each week that the first customer to order has to wait before the product is delivered. Should Josh, Inc. produce to stock or to order?

+3
Answers (1)
  1. 5 July, 22:09
    0
    1. Make to stock

    Average inventory = Order quantity/2 = 500/2 = 250

    Inventory holding cost = average inventory multiplied by unit holding rate = 250 * 5 = 1250

    2. Make to order

    Discount = 5000*5 = 25000

    It is better to stock and produce because costs are low
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Josh, Inc. is faced with the choice of either producing a newly designed product, XX-30, to stock in anticipation of demand or to customer ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers