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Part 1
Rocky Mountain Tire Center sells
13,000
go-cart tires per year. The ordering cost for each order is
$35,
and the holding cost is
40%
of the purchase price of the tires per year. The purchase price is
$24
per tire if fewer than
200
tires are ordered,
$18
per tire if
200
or
more but
fewer than
8,000 tires
are ordered, and
$15
per tire if
8,000
or more tires are ordered.
Part 2
a) How many tires should Rocky Mountain order each time it places an order?
Rocky Mountain's optimal order quantity is
units (enter your response as a whole number).
Part 3
b) What is the total cost of this policy?
Total annual cost of ordering optimal order
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