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    Hi Guys, I am doing a mathematics module in my business degree and those are the questions I need some help with, each question is worth 30 marks each, can somebody shine some light here?

    A store sells shampoos which are ordered from a manufacturer. Annual demand for the shampoos is 5000. The store incurs an annual holding cost of 20 percent of purchase price and incurs a fixed order placement, transportation and receiving cost of £49 each time an order for the shampoos is placed, regardless of the order quantity. The price charged by the manufacturer varies according to the following discount pricing:

    Order quantity Unit Price
    0 – 999 £5.00
    1000 – 2499 £4.85
    2500 and over £4.75

    Determine the quantity of shampoos that the supermarket should order each time it makes an order

    2. A shoe company is having a spring-summer promotion of the latest model of a men’s shoe. Because the shoe is designed for spring and summer months, it cannot be expected to sell in the autumn. The company can buy the shoes for a reasonable price of £30 per pair and sell them for £40 per pair. The company plans to hold a special August clearance sale in an attempt to sell all shoes not sold by July 31. The sale price in August will be £15 per pair; however, there will be an additional associated cost of £1 per unsold pair of shoes.
    As there is no statistical data, the company estimates that they can sell any number between 30 and 50 pairs of shoes, inclusive, with equal probabilities.

    How many pairs of shoes should the Company order to maximize their profit?
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Updated: March 10, 2013
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