Business: A) from a keynesian point of view, which is more likely to cause a recession: aggregate demand or aggregate supply, and why?

A) from a keynesian point of view, which is more - id1351546, dtrdtrdtrdtrdrt1325

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18.05.2023

a) Total annual inventory cost (including purchase cost) for the current supplier = $421,154

b) Annual holding cost for the new supplier (when purchasing 3,000 each order) = $3,675

c) Total annual inventory cost = $389,298

d) Since the total cost has reduced, Flora Beauty should choose the new supplier option.

Explanation:

Annual demand, D = 22,000

Unit cost, C = $19

Ordering cost, K = $85

Unit carrying cost, h = 14% of C

h = 0.14*19 = $2.66

(a) Total annual inventory cost for the current supplier, T_c

$T_c = (D*C) + (\frac{Q'h}{2} ) + \frac{DK}{Q'}$ ...........(1)

Economic order quantity,Q'

$Q' = \sqrt{2DK/2.66} \\Q' = \sqrt{2*22000*85/2.66}\\Q' = 1186 units$

Su bstitute Q' and other parameters into Tc

$T_c = (D*C) + (\frac{Q'h}{2} ) + \frac{DK}{Q'}$

$T_c = (22000*19) + \frac{1186*2.66}{2} + \frac{2000*85}{1186} \\T_c = \$421,154$

(b)

Q = 3000

C = $17.50

h = 0.14*17.50 = 2.45

Annual holding cost for the new supplier = (Q/2)*h = (3000/2)*2.45 = $3,675

(c)

Total annual inventory cost = (D*C) + (Q/2)*h + (D/Q)*K

Total annual inventory cost = (22000*17.5) + (3000/2)*2.45 + (22000/3000)*85

Total annual inventory cost for the new supplier = $389,298

Since the total cost has reduced, Flora Beauty should choose the new supplier option.

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