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The annual demand, ordering cost, and the inventory carrying cost rate for a certain item are D = 10,000 units, S= $75/order and I = 20% of item price. Price is established by the following quantity discount schedule. What should the order quantity be in order to minimize the total annual cost?

The annual demand, ordering cost, and the inventory carrying cost rate for a certain item are D = 10,000 units, S= $75/order and I = 20% of item price. Price is established by the following quantity discount schedule. What should the order quantity be in order to minimize the total annual cost?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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The annual demand, ordering cost, and the inventory carrying cost rate for a certain item are D = 10,000 units, S= $75/order and I = 20% of item price. Price is established by the following quantity discount schedule. What should the order quantity be in order to minimize the total annual cost? 

 

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The annual demand, ordering cost, and the inventory carrying cost rate for a certain item are D units, S= $75/order and I = 20% of item price. Price is established by the following quantity discount schedule. What should the order quantity be in order to minimize the total annual cost? = 10,000 Quantity 1 to 999 1,000 to 4,999 5,000 and up Price $2.50/unit $2.30/unit $1.85/unit
Transcribed Image Text:The annual demand, ordering cost, and the inventory carrying cost rate for a certain item are D units, S= $75/order and I = 20% of item price. Price is established by the following quantity discount schedule. What should the order quantity be in order to minimize the total annual cost? = 10,000 Quantity 1 to 999 1,000 to 4,999 5,000 and up Price $2.50/unit $2.30/unit $1.85/unit
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