Determine the most cost-effective ordering policy for greens

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Reference no: EM131672400

A local nursery. Greens, uses 1, 544 bags of plant food annually. Greens works fifty-two weeks per year. It costs $11 to place an order for plant food. Lead time is one week. Rapid Grower, the supplier of plant food for Greens, has offered the following quantity discounts. If the nursery places orders of 50 bags or less, the cost per bag is $21. For orders greater than 50 bags but less than 100 bags, the cost per bag is $19. For orders of 100 bags or more, the cost is $18 per bag. Greens estimates its holding cost to be 22 percent of the unit price. Determine the most cost-effective ordering policy for Greens. Optimal ordering policy is to order. bags at a time.

Reference no: EM131672400

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