Question: You are given a multiple cost proposal from your supplier based on the below information: Order Size Cost 0 - 3,999 12 4,000 - 9,999

You are given a multiple cost proposal from your supplier based on the below information:

Order Size Cost
0 - 3,999 12
4,000 - 9,999 10.1
10,000+ 9.5

Additionally, you have the following internal data points:

Field Value
Ordering Cost $100
Holding Rate 10%
Annual Demand 80,000 Units

You are an EOQ Whiz, and quickly determine the following EOQ values at the different cost points:

Cost EOQ
12 3,652
10.1 4,040
9.5 4,103

Based on this analysis, which cost structure would offer you the lowest TAIC?

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