Excel Online Structured Activity: OOQ with Quantity Discounts $2$

The Soon Company is a multinational company that purchases one of its crucial components from a supplier who offers quantity discounts to encourage larger order quantities. The supply chain manager of the company wants to determine the optimal order quantity to minimize the total annual inventory cost. The company$$s annual demand forecast for the item is $850$ units, the order cost is $$10$ per order, and the annual holding rate is $38$ percent. The price schedule for the item is:

Order Quantity Price per Unit $($$$)$

$12004\mathrm{.}50$

$2014003\mathrm{.}50$

$401$ and above $2\mathrm{.}50$

The first break point is $201$ units and the second is $401$ units. Open the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations.

Open spreadsheet

Questions

$1.$ What is the first feasible EOQ for this component? Round your answer to two decimal places.

fill in the blank $2$

$99\mathrm{.}71$

units

$2.$ Find the total annual inventory costs for the first feasible EOQ and for the price break points at each lower price level. $(201$ units at $$3\mathrm{.}50$ and $401$ units at $$2\mathrm{.}50)$ Round your answers to the nearest cent.

TAICEOQ: $ fill in the blank $3$

$3995\mathrm{.}50$

TAICQ$=201$: $ fill in the blank $4$

$3150\mathrm{.}95$

TAICQ$=401$: $ fill in the blank $5$

$2335\mathrm{.}67$

What is the optimal order quantity that will minimize the total annual inventory cost for this component? Round your answer to two decimal places.

OOQ: fill in the blank $6$

units