A mining company routinely replaces a specific part on a certain type of equipment. The usage rate is 40 per week and there is no significant seasonality. The supplier of the par offers the following all-units discount structure:
Range of Q
Unit Cost
0 < Q < 300
$10.00
300 ≤ Q
$9.70
The fixed cost of a replenishment is estimated to be $25 and a carrying charge of 0.26 $/$/year is used by the company.
a. What replenishment size should be used?
b. What is the TRC?
c. What is the time between orders?
d. If the supplier was interested in having the mining company acquire at least 500 units at a time, what is the largest unit price they could charge for an order of 500 units?