What is optimal order quantity and the minimum annual cost

Assignment Help Operation Management

Reference no: EM131637527

Bell Computers purchases integrated chips at $350 per chip. The holding cost is $36 per unit per year, the ordering cost is $122 per order, and sales are steady at 395 per month. The company's supplier, Rich Blue Chip Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below:

Rich Blue Chip's Price Structure

Quantity Purchased. Price per unit

1-99. $350

100-199. $325

200 or more. $300

A. What is the optimal order quantity and the minimum annual cost for Bell Computers to order, purchase, and hold these integrated chips?

B. Bell Computers wishes to use a 10% holding cost rather than the fixed $36 holding cost in part A. What is the optimal order quantity, and what is the optimal annual cost?

Reference no: EM131637527

Questions Cloud

Powerful brands are built on innovativenes and advertising : Powerful brands are built on innovativeness and advertising.

Who pays the rest of the tariff amount : From the Work It Out "Effects of Trade Barriers," you can see that a tariff raises the price of imports.

Explain the concept of a stable economic equilibrium : Using an appropriate diagram, explain the concept of a stable economic equilibrium and provide

Differentiate i incremental and breakthrough innovation : Differentiate between incremental and breakthrough innovation and assess the risks associated with each approach

What is optimal order quantity and the minimum annual cost : What is the optimal order quantity and the minimum annual cost for Bell Computers to order, purchase, and hold these integrated chips?

Stocked in company inventory of component parts : Item X is a standard item stocked in a company’s inventory of component parts. What is the annual cost for ordering item X?

Why is a standards policy preferred to tariffs : Assume a perfectly competitive market and the exporting country is small. Using a demand and supply diagram, show the impact of increasing standards.

Key roles for team members in each of those frameworks : What are the key roles for team members in each of those frameworks/methodologies?

Relationship between business and operating strategy : Examine how the concept “translate thought into action” bears on the relationship between business strategy and operating strategy

User Account

All Pages