Nails Company Assignment Read the case study at the end of chapter eight in your text (pages 150-151).Using knowledge learned from the chapter, supplemental notes and videos, as well as secondary research, answer the following questions (these are different from the textbook questions, so be sure to answer the ones below): case study and questions attached
Ensure professional presentation with proper spelling, grammar, etc.
Must have proper in-text citations and bibliography page where appropriate. (textbook link provided below)
Organize with sub headings (Question 1, Question 2, etc.).
Include page numbers.
Include a cover page or paper header.
3-4 pages content
textbook google drive link: https://drive.google.com/file/d/13S17JtWW3Qm1AOqo7… Low Nail company
After making some wise short-term investments at a race track, Chris Low had some
additional cash to invest in a business. The most promising opportunity at the time was in
building supplies, so Low bought a business that specialized in sales of one size of nail.
The annual vol- ume of nails was 2,000 kegs, and they were sold to retail customers in an
even flow. Low was uncertain how many nails to order at any time. Initially, only two
costs con- cerned him: order-processing costs, which were $60 per order without regard
to size, and warehousing costs, which were $1 per year per keg space. This meant that
Low had to rent a constant amount of warehouse space for the year, and it had to be large
enough to accom- modate an entire order when it arrived. Low was not worried about
maintaining safety stocks, mainly because the outward flow of goods was so even. Low
bought his nails on a delivered basis.
1. Using the EOQ methods outlined in the chapter, how many kegs of nails should Low
order at one time if his annual volume is 5000 kegs?
2. Assume all conditions in Question 1 hold, except that Low’s supplier now offers a
quantity discount in the form of absorbing all or part of Low’s order-processing costs. For
orders of 1200 or more kegs of nails, the supplier will absorb all the order-processing
costs; for orders between 500 and 1199 kegs, the supplier will absorb half. What is Low’s
new EOQ? (It might be helpful to lay out all costs in tabular form for this and later
3. Temporarily, ignore your work on Question 2. Assume that Low’s warehouse offers to
rent Low space on the basis of the average number of kegs Low will have in stock, rather
than on the maximum number of kegs Low would need room for whenever a new
shipment arrived. The storage charge per keg remains the same. Does this change the
answer to Question 1? If so, what is the new answer?
4. Take into account the answer to Question 1 and the supplier’s new policy outlined in
Question 2 and the warehouse’s new policy in Question 3. Then determine Low’s new
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