Inventory management - Holding costs Consider two products A and B that have identical cost, retail príce and demand parameters and the same short selling season. The newsvendor model is used to manage inventory for both products. Product A is to be discontinued at the end of the season this year, and the teftovers will be salvaged at 65% of the cost Product B will be re-offered next summer, so any leftovers this year can be carried over to the next year while incurring a holding cost on each leftover unit equal to 25% of the product's cost. How do the stocking quantities for these products compare?

Inventory management - Holding costs Consider two products A and B that have identical cost, retail príce and demand parameters and the same short selling season. The newsvendor model is used to manage inventory for both products. Product A is to be discontinued at the end of the season this year, and the teftovers will be salvaged at 65% of the cost Product B will be re-offered next summer, so any leftovers this year can be carried over to the next year while incurring a holding cost on each leftover unit equal to 25% of the product's cost. How do the stocking quantities for these products compare?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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