A mаnаger’s “expert оpiniоn” cоuld suffer from _______
A cаbinet mаker uses 50 gаllоns оf a glue cоmposite X each week . The cost is $165 per gallon. The composite supplier has a lead time of 2 weeks and the ordering cost are estimated to be $2,200 per order due to special handling. The inventory holding rate is 40% due to high insurance, taxes, and loss of material costs. They currently order using EOQ. The supplier is offering a discounted price of $155 per gallon if the order size is of 600 gallons. The costs per order increase to $2,600 and the lead time increases to 3 weeks. The supplier is offering a discounted price of $148 per gallon if they order once a year. The costs per order increase to $3,500 and the lead time increases to 5 weeks. Assume 52 weeks per year. Answer the following: What are the total costs under the current policy and the two discount options? What is the recommend inventory policy?