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Question: problem 5 you manage the orders of a nike shoe...

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Problem 5. You manage the orders of a Nike shoe model in a Nike distribution center. The purchasing cost per pair is S55, and you pay $575 to place an order. You calculate holding costs based on a monthly interest rate of 8%. Using your knowledge of E00, your current order quantity is 640 pairs. i) What is the monthly demand? i) The DC management asks you to limit the maximum amount of time your shoes sit in inventory to 10 days (i.e. 1/3 ofa month). Would your order quantity change, and if so to what? iii) After this request, management offers a second option: You can store your shoes in a different part of the warehouse, but added handling costs here increase the holding cost rate to $6 per pair per month. Is this option preferable to your policy in (i)? Justify your answer

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