Party Supplies Inc. has introduced the following quantity discounts for a special product: Order Quantity 0-299...

 

Transcribed Image Text:

Party Supplies Inc. has introduced the following quantity discounts for a special product: Order Quantity 0-299 300-499 Price per Unit $60.00 $58.80 500 or more $57.00 The annual demand for this item is 936, its ordering cost is $35 per order, and its annual holding cost is 10 percent of the unit price. What is the optimal order quantity (EOQ) considering the quantity discount? Party Supplies Inc. has introduced the following quantity discounts for a special product: Order Quantity 0-299 300-499 Price per Unit $60.00 $58.80 500 or more $57.00 The annual demand for this item is 936, its ordering cost is $35 per order, and its annual holding cost is 10 percent of the unit price. What is the optimal order quantity (EOQ) considering the quantity discount?

Answer rating: 100% (QA)

To determine the optimal order quantity EOQ considering the quantity discount we can use the EOQ formula and compare the total costs for each quantity discount tier The EOQ formula is given by EOQ 2DS H Where D Annual demand S Ordering cost per order H Holding cost per unit Lets calculate the EOQ for ... View the full answer