CU, Incorporated, ( CUI) produces copper contacts that it uses in switches and relays. CUI needs to determine the order quantity, Q, to meet the annual demand at the lowest cost. The price of copper depends on the quantity ordered. Here are price- break and other data for the problem:

Price of copper $ 0.82 per pound up to 2,499 pounds $ 0.81 per pound for orders between 2,500 and 5,000 pounds $ 0.80 per pound for orders greater than 5,000 pounds
Annual demand 50,000 pounds per year
Holding cost 20 percent per unit per year of the price of the copper
Ordering cost $ 30
Which quantity should be ordered?

  • CreatedApril 09, 2014
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