Question: If you could please explain how you got the results it would help me better understand. Thank you. E Office Supplies sells discounted office suppliers

If you could please explain how you got the results it would help me better understand. Thank you.

E Office Supplies sells discounted office suppliers over the Internet. One popular product sold is legal-size notepads. E Office Supplies offers the following quantity discount structure, based on how many dozen notepads are ordered:

Order Size

1-19 dozen

20-99 dozen

100-199 dozen

200+

Price

$21.95 per dozen

$19.95 per dozen

$18.95 per dozen

$17.95 per dozen

The STHDS law firm wants to decide how many legal notepads to order using the EOQ model for quantity discounts. Its ordering cost is $35 per order, its anticipated need (demand) in the coming year is for 1,500 dozen notepads, and its annual holding cost is 40 percent of the acquisition cost. Assume that shipments are received instantaneously, demand is known and the usage constant, and the lead time is known and constant.

a) Based on the lowest total annual cost (ordering plus holding plus acquisition cost), how many dozen notepads should STHDS order each time?

b) What is the resulting total annual cost (ordering plus holding plus acquisition cost) per year for this order quantity?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!