The payback period is ____________ years. 

Use the following information for the next five questions.  Clothes, Inc., has an average annual demand for medium polo shirts of 18,000 units. The cost of placing an order is $90 and the cost of carrying one unit in inventory for one year is $25. The stockout cost is $5 per unit. The purchase-order lead time is 6 days. We assume there are 360 days per year. Demand for every 6 days may vary with the following probability distribution:                                                                                                             Demand for 6 days: 240 units 270 units 300 units 330 units 360 units Probability (sums to 1.00): 0.15 0.2 0.3 0.2 0.15

Should Packer add the new product line? 

Packer Division’s return on investment with the new product line is ________________%. 

Packer Division’s return on investment without the new product line is ________________%. 

If Clothes, Inc. decides to hold 30 units as safety stock, the expected annual stockout cost is $_____________. 

If the company forgot to include the opportunity cost of carrying inventory when making EOQ decisions, the cost of this prediction error is $________________ (Round each step and the final answer to two decimal places).

Two possible transfer prices are under consideration by the two divisions: $35 and $40. Would corporate profits increase, decrease, or remain the same if $35 is selected instead of $40?

Packer Division’s residual income without the new product line is $_____________

If a transfer between the two divisions is arranged at a price (on 3,000 units of super chips) of $40, the Chip division’s profits will (a) increase or decrease by (b) $_______________________ compared to its prior month. Select the answer for (a) below.