Short Grass Incorporated Is a Distributor of Golf Balls

question 43

Multiple Choice

Short Grass Incorporated is a distributor of golf balls. Martin's Golf Supplies is a local retail outlet which sells golf balls. Martin's purchases the golf balls from Short Grass Incorporated at $1.15 per ball; the golf balls are shipped in cartons of 52. Short Grass Incorporated pays all incoming freight, and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality. Annual demand is 157,520 golf balls at a rate of 3291 balls per week. Martin's Golf Supplies earns 12% on its cash investments. The purchase-order lead time is one week. The following cost data are available:

Purchasing at the EOQ recommended level, how many deliveries will be made during each time period? (Round costs to the nearest cent and quantities to the nearest whole number.)

• A) 2 deliveries
• B) 4.3 deliveries
• C) 9.8 deliveries
• D) 12 deliveries

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Definitions:

Precautions

Actions taken in advance to prevent harm or secure good outcomes.

Moral Hazard

The situation where the behavior of one party changes to the detriment of another after a transaction has occurred.

Credit Union

A member-owned financial cooperative, controlled by its members and operating for the purpose of providing credit at competitive rates, as well as other financial services to its members.

Opportunistically

Acting Opportunistically means taking advantage of situations with little regard for principles or consequences, often seeking to benefit at the expense of others.