Question: A particular raw material is available to a company at three different prices, depending on the size of the order: Less than 100 pounds...............$ 20

A particular raw material is available to a company at three different prices, depending on the size of the order:

Less than 100 pounds...............$ 20 per pound

100 pounds to 1,000 pounds............$ 19 per pound

More than 1,000 pounds.............$ 18 per pound


The cost to place an order is $ 40. Annual demand is 3,000 units. Holding (or carrying) cost is 25 percent of the material price.

What is the economic order quantity to buy each time?


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