Dyipni company imports tires and expects to need 25,000 tires per year. It is able to...
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Dyipni company imports tires and expects to need 25,000 tires per year. It is able to negotiate discounts with its tire supplier, depending on the number of tires it orders per transaction. The ordering cost is $100 if Dyipni orders less than 5,000 tires per transaction. Otherwise, the ordering cost rises to $300 due to additional related expenses, which will be shouldered by Dyipni. The holding cost is estimated to be 50% of the purchase price. All cost data are summarized in the table below. Units Less than 300 300-4,999 Purchase Price Ordering Cost $ 85 $ 100 80 100 and 75 300 5,000 above a. What is the optimal order quantity and the optimal total cost for Dyipni? b. How much should be the purchase price of ordering 5000 or more tires such that the optimal Q* is the EOQ? Dyipni company imports tires and expects to need 25,000 tires per year. It is able to negotiate discounts with its tire supplier, depending on the number of tires it orders per transaction. The ordering cost is $100 if Dyipni orders less than 5,000 tires per transaction. Otherwise, the ordering cost rises to $300 due to additional related expenses, which will be shouldered by Dyipni. The holding cost is estimated to be 50% of the purchase price. All cost data are summarized in the table below. Units Less than 300 300-4,999 Purchase Price Ordering Cost $ 85 $ 100 80 100 and 75 300 5,000 above a. What is the optimal order quantity and the optimal total cost for Dyipni? b. How much should be the purchase price of ordering 5000 or more tires such that the optimal Q* is the EOQ?
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