Glinda Co. has the following quantity discount policy with its supplier. Quantity...............................Price per Unit 1499 units...............................$15.00 500999

Question:

Glinda Co. has the following quantity discount policy with its supplier.

Quantity...............................Price per Unit

1–499 units...............................$15.00

500–999 units...........................$14.70

1,000–1,999 units.....................$14.15

2,000 units +.............................$13.30

The economic order quantity is 750 units and the annual usage is 21,094 units. The ordering cost (K) is $20 per order and the carrying cost of inventory (H) is $1.5 per unit. Determine the most cost effective order quantity.

Economic Order Quantity
Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. This production-scheduling model was developed in 1913 by Ford W. Harris and has...