# Slayton's Furniture Store

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Case summary of Slayton's Furniture Store

Slayton furniture is large furniture stores are located near Lake Michigan in downtown Chicago. Joan Jeffry as part of purchase to receive offers from Drexel furniture saes where to buy 10 sets of bedroom sets will reduce delivery costs from \$ 10 to \$ 9. This amount is larger than usual were booked at only 6 bedroom sets. When messages as many as 15 sets or more obtained a discount of 2% or \$ 12 / set. In the shop there is a warehouse for storing Joan 15 bedroom sets but it would be the opportunity cost because temat can not store other items.

QUESTIONS

1. What should Joan do?

By using the available economic data of these products can be analyzed as follows:

 DOVETAIL BEDROOM SET Selling Price (each) \$1000 Unit Cost (each)* (C) \$600 Average annual cash (D) 80 sets Ordering cost (S) \$40 / order Annual carrying cost (i) 30% Safety stock 2 sets Weight per set 1000 lb Lead time (average) 4 weeks

*Exclude Freight cost

Freight Cost 1 bedroom set        = 1000 lb * \$10

= 10 cwt * \$10

= \$100

Unit cost        = \$100 + \$600

= \$700

Optimal number of reservations to buy a bedroom by using EOQ (Economic Order Quantity)

EOQ        =         =   = 5,52 unit ≈ 6 sets[pic 1][pic 2]

Total cost         = purchase cost or production cost + ordering cost + holding

cost

=DC + [pic 3]

a. Calculation of Total Cost to purchase 6 sets

Freight cost         = \$100

Unit cost (C)         = \$700

TC        = S   + iC   + DC   = 40    + (0,3) (700)   +(80) (700)

= 533,33 + 630 +56000

= \$57163,33

So the total cost of purchase bedroom as much as six sets of \$ 57,163.33

b. Calculation of Total Cost for the purchase of 10 sets

Freight Cost 1 bedroom set        = 10 cwt * \$9

= \$90

The cost of delivery (freight costs) of \$ 10 to \$ 9

Unit cost (C) = \$ 600 + \$ 90

= \$ 690

TC = + = 320 + 1035 + 55200

= \$ 56,555

So the total cost of purchase bedroom as much as 10 sets of \$ 56,555

c. Calculation of Total Cost for the purchase of 15 sets

Freight Cost 1 bedroom set = 10 cwt * \$ 9

= \$ 90

• Discount of 2% or \$ 12 / set.