You have a daily demand for business cards of 5 units, and you are ordering your business cards from Business Card Kings, which charges $2 per card and $55 per order. For the calculation of your holding cost, you think that an annual interest rate of 30% is reasonable. Suppose that you will use the EOQ model. Note:
Throughout this problem, you are required to round all solutions (intermediary results and the final answers) to integers.

a) Calculate the economic order quantity (i.e., EOQ) per order.
Now suppose that Business Card Kings provides a quantity discount: if you order less than 400 (including 400), it is $2 per card; but if you order more than 400, it is $1.25 per card.

b) Given this quantity discount scheme, calculate the optimal order quantity and the minimal cost (including holding, setup, and purchase costs).
Now suppose that the order delivery lead time from Business Card Kings is two weeks.

c) Determine the re-order point based on the on-hand level of inventory of your business card

Answer rating: 100% (QA)

aEconomic Order Quantity EOQ Annual Demand D Daily Demand 365 5 unitsday 365 days 1825 units Orderin... View the full answer