Determine the optimal order quantity per order

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Reference no: EM131880075

The office manager for the Gecko Life Insurance Company orders letterhead stationery from an office products ?rm in boxes of 500 sheets.

The company uses 7000 boxes per year, and it is company policy to never have stockouts of stationery. Annual carrying costs are 19% of the price of a box of stationery, and ordering costs are $23. The following discount price schedule is
provided by the office supply company:

Order Quantity	Price per Box
(boxes)
200-999	$35
1000-2999	33
3000-5999	30
6000+	29

For each of the four price points, determine the following:

· Optimal order quantity per order

· Minimum total annual inventory costs

· The number of orders per year

· The time between orders (in working days)

Assume that demand is constant, and that the office is open for business 5 days per week and 52 weeks per year, with the exception of 10 holidays. Given these assumptions, which price point is optimal?

You are on the right track if the undiscounted values of Qopt and TCmin are 220.05 and 246,463.32, respectively and if the TC value at Q=1,000 is $234,296.00 with the discount.

ANSWER IN EXCEL PLEASE

Reference no: EM131880075

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