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Jason Chu is considering starting a children's fashion boutique. However, he has only a limited budget of $35,000 to make his initial purchases. Jason divides the products into 4 areas: shoes, dresses, jeans, and shorts. The demand and costs are given below: Shoes Dresses Jeans Shorts Monthly Demand 200 400 450 250 Cost per unit $30 $50 $40 $20 Ordering Cost/order $50 $100 $150 $70 The difference in ordering costs is due to the fact that Jason purchases these products from different locations. They include the cost of Jason's time in making purchases. Assume holding costs are 30% and are based on the cost of the product. 1. Find the optimal quantities that Jason should purchase of each type of product so that he does not exceed his budget.

Jason Chu is considering starting a children's fashion boutique. However, he has only a limited budget of $35,000 to make his initial purchases. Jason divides the products into 4 areas: shoes, dresses, jeans, and shorts. The demand and costs are given below: Shoes Dresses Jeans Shorts Monthly Demand 200 400 450 250 Cost per unit $30 $50 $40 $20 Ordering Cost/order $50 $100 $150 $70 The difference in ordering costs is due to the fact that Jason purchases these products from different locations. They include the cost of Jason's time in making purchases. Assume holding costs are 30% and are based on the cost of the product. 1. Find the optimal quantities that Jason should purchase of each type of product so that he does not exceed his budget.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Question 3 QUESTION 3: Jason Chu is considering starting a children's fashion boutique. However, he has only a limited budget of $35,000 to make his initial purchases. Jason divides the products into 4 areas: shoes, dresses, jeans, and shorts. The demand and costs are given below: Shoes Dresses Jeans Shorts Monthly Demand 200 400 450 250 Cost per unit $30 $50 $40 $20 Ordering Cost/order $50 $100 $150 $70 The difference in ordering costs is due to the fact that Jason purchases these products from different locations. They include the cost of Jason's time in making purchases. Assume holding costs are 30% and are based on the cost of the product. 1. Find the optimal quantities that Jason should purchase of each type of product so that he does not exceed his budget. 2. If Jason could purchase all the items at the same location, would that alter your solution? Why?
Transcribed Image Text:Question 3 QUESTION 3: Jason Chu is considering starting a children's fashion boutique. However, he has only a limited budget of $35,000 to make his initial purchases. Jason divides the products into 4 areas: shoes, dresses, jeans, and shorts. The demand and costs are given below: Shoes Dresses Jeans Shorts Monthly Demand 200 400 450 250 Cost per unit $30 $50 $40 $20 Ordering Cost/order $50 $100 $150 $70 The difference in ordering costs is due to the fact that Jason purchases these products from different locations. They include the cost of Jason's time in making purchases. Assume holding costs are 30% and are based on the cost of the product. 1. Find the optimal quantities that Jason should purchase of each type of product so that he does not exceed his budget. 2. If Jason could purchase all the items at the same location, would that alter your solution? Why?
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