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Number of moves Number of shipments 30 per nove 88 per shipment Caldwell Supply, a...

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Number of moves Number of shipments 30 per nove 88 per shipment Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, and distributing. The firm reports the following operating data for the year just completed Quantity of Cost Activity Cost Driver Driver Cost per unit of Cost Driver Purchasing Number of purchase orders 1,000 Warehousing $150 per order 3,000 Distributing Seo Caldwell buys 100,000 units at an average unit cost of $10 and sells them at an average unit price of $20 The firm also has fixed operating costs of $250,000 for the year Caldwell's customers are demanding a 10% discount for the coming year. The company expects to sell the same amount if the demand for price reduction can be met Caldwell's suppliers, however, are willing to give only a 2% discount Required: Caldwell has estimated that it can reduce the number of purchase orders to 680 and can decrease the cost of each shipment by $3 with minor changes in its operations. Any further cost savings must come from reengineering the warehousing processes. What is the maximum cost (le target cost) for warehousing if the firm desires to earn the same amount of profit next year? Maximum cost

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