Assignment Problems
1. Please cite an example of forward vertical integration and an example of backward vertical integration. Avoid the cases cited in the textbook and lecture slides.
2. Company X can purchase a certain component from either Supplier A or Supplier B. Supplier A offers an incremental quantity discount and charges $10 per unit for the first 1,000 units in an order, $9 per unit for the next 1,000 units in the order, and $8 per unit for any unit beyond. Supplier B offers an all-unit discount and charges $9 per unit for orders of no more than 2,000 units and $8.5 per unit for any bigger orders.
(a) Suppose Company X decides to buy 2,500 units from Supplier A. What is the average unit cost of the order? Please provide at least one step of calculation and the correct answer for full credit.
(b) If Company X wants to place an order of 5,000 units, which supplier offers a lower total cost. Please provide at least one step of calculation and the correct answer for full credit.
3. Suppose the revenue for a firm is $2,000,000. Its cost of goods sold is $85,000, and its average inventory value for the year is $50,000.
a) What is the firm's inventory turnover? Please include the formula, at least one step of calculation, and the correct answer for full credit.
b) What is the weeks-of-supply of the firm? Please include the formula, at least one step of calculation, and the correct answer for full credit.