Sportsworld, Inc

question 81

Essay

Sportsworld, Inc. currently incurs $100,000 in annual purchasing costs, and each purchase order costs the firm approximately $3. Third-Party Logistics, Inc. is willing to perform purchasing services for Sportsworld at a $50,000 annual fixed retainer plus $7 per purchase order. Sportsworld currently places 10,000 orders per year.
a) What is the current total cost of purchasing for Sportsworld?
b) What would the cost of purchasing be if Third-Party Logistics were used?
c) What is the indifference point for the two alternatives?

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Definitions:

Infant Survival

The survival of a baby from birth to a specific age, often influenced by factors such as healthcare, nutrition, and social conditions.

Natural Selection

A process in which organisms better adapted to their environment tend to survive and produce more offspring, leading to evolutionary changes in the species.

Directed Genetic Change

Intentional alteration of the genetic makeup of an organism to achieve desired traits, often through genetic engineering or selective breeding.

Adaptations

The process by which organisms adjust over time to their environment, resulting in genetic changes that enhance survival and reproductive success.