Question: Rocky Mountain Tire Center sells 20 000 go cart tires per year

Rocky Mountain Tire Center sells 20,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 20% of the purchase price of the tires per year. The purchase price is $20 per tire if fewer than 500 tiles ate ordered, $18 per tire if 500 or more—but fewer than 1,000—tires are ordered, and $17 per tire if 1,000 or more tires are ordered.
(a) How many tires should Rocky Mountain order each time it places an order?
(b) What is the total cost of this policy?

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  • CreatedJuly 23, 2013
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