Inventory Problems:

Annual demand = 5000 units

Carrying cost = 25% per year

Order cost = $100 per order

Assuming a constant price of $75 per unit:

a) Determine the optimal order quantity

b) Determine the total relevant costs associated with part a

The following quantity discount schedule is now put into place:

number of units unit price

1 - 100 $75

101 - 200 $65

201 - $50

Assuming an all units quantity discount:

c) Determine the optimal order quantity

d) Determine the total relevant costs associated with part c Assuming an incremental quantity discount:

e) Determine the optimal order quantity f) Determine the total relevant costs associated with part e