Question: Consider the all-units quantity discount schedule below. The annual demand is 90,000 units, setup cost is $1000 per order and annual holding cost is 30%

Consider the all-units quantity discount schedule below. The annual demand is 90,000 units, setup cost is $1000 per order and annual holding cost is 30% of the unit Price. There are 200 working days per year and the delivery lead time is 2 working days. All the assumptions of Economic Order Quantity (EOQ) model are satisfied.

Quantity Ordered Price Per Unit 1-499 $300 500-999 $280 1000-1499 $250 1500 and over $210

Show the units and steps of calculation when you answer the following questions.

a) What are the optimal order quantities for each discount option based on the EOQ equation?

b) What are the total annual costs for each discount option based on the calculation in (a)? What is the best order quantity?

c) What is the reorder point (ROP) of this solution?

d) Based on the best order quantity in (b), what is the time between orders (in working days)?

Quantity Ordered Price Per Unit 1-499 $300 500-999 $280 1000-1499 $250 1500 and over $210

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