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The annual demand for an item is 10,000 units. The cost to process an order is $75 and the inventory holding cost is 2.5% of item cost per quarter. Given the following price breaks for purchasing the item, what is the optimal order quantity? Quantity 1-9 10-99 100-499 500 - 2,999 3,000 - 4,999 5,000 or more Price $3.35 per unit $3.15 per unit $2.95 per unit $2.80 per unit $2.30 per unit $1.85 per unit The annual demand for an item is 10,000 units. The cost to process an order is $75 and the inventory holding cost is 2.5% of item cost per quarter. Given the following price breaks for purchasing the item, what is the optimal order quantity? Quantity 1-9 10-99 100-499 500 - 2,999 3,000 - 4,999 5,000 or more Price $3.35 per unit $3.15 per unit $2.95 per unit $2.80 per unit $2.30 per unit $1.85 per unit
Expert Answer:
Answer rating: 100% (QA)
To find the optimal order quantity we can use the Economic Order Quantity EOQ formula The EOQ formul... View the full answer
Related Book For
Quantitative Methods for Business
ISBN: 978-0840062345
12th edition
Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey Cam
Posted Date:
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