The 21,000-seat Air East Arena houses the local professional ice hockey, basketball, indoor soccer, and arena football teams as well as various trade shows, wrestling and boxing matches, tractor pulls, and circuses. Arena vending annually sells large quantities of soft drinks and beer in plastic cups with the name of the arena and the various team logos on them. The local container cup manufacturer that supplies the cups in boxes of 100 has offered arena management the following discount price schedule for cups:

Order quantity (boxes)	Price per box
200-6999	$47
7000-11999	43
12.000-19,999	41
20,000+	38

The annual demand for cups is 2.3 million, the annual carrying cost per box of cups is $1.90, and ordering cost is $320. Determine the optimal order quantity and total annual inventory cost.

Answer rating: 100% (QA)

Let us reduce this problem from the demand of cups to the demand of boxes Since the demand for cups is 23 Million per annum the demand for boxes will ... View the full answer