QUESTION 1

R. C. Barker makes purchasing decisions for his company. One product that he buys costs $50 per unit when the order quantity is less than 500. When the quantity ordered is 500 or more, the price per unit drops to $48. The ordering cost is $30 per order and the annual demand is 7,500 units. The holding cost is 10 percent of the purchase cost. If R. C. wishes to minimize his total annual inventory costs, he must evaluate the total cost for two possible order quantities.

What are these two possible Optimal order quantities (EOQ)? (Round answer to nearest unit)

a.300 and 306

b.300 and 500

c. 306 and 50

d. 306 and 500

QUESTION 2

What are these two possible adjusted order quantities (Q)? (Round answer to nearest unit)

1. 300 and 306
2. 300 and 500
3. 306 and 500
4. 500 and 306