Switch order size from current order size

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Reference no: EM133861613

Question

• Annual demand = 1000 units • Ordering cost = $50/order • Annual carrying cost = 35 percent • Purchasing cost = $50 per unit for 0-99 $48 per unit for 100-299 $46 per unit for 300-599 $44 per unit for 600 or more

1. What is the optimal order size that can minimize the total cost for the following question?

2. Suppose the current order size is 90 units per order. How much savings can we get if we switch order size from current order size (i.e., 90 units) to the optimal order size found in the previous question (i.e., Q42)?

Reference no: EM133861613

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