Suppose that you are a manager of a department, which uses 6000 boxes of rivets per...

Suppose that you are a manager of a department, which uses 6000 boxes of rivets per year. The supplier quotes you a price of $10 per box for an order size of 199 boxes or less, a price of $8 per box for orders of 200 to 999 boxes, and a price of $6 per box for an order of 1,000 or more boxes. You assign an annual holding cost of $2.5 per unit of inventory. Assume that ordering cost is $50/order. If the optimal quantity for this model is 1000 units, what is approximately the minimal total annual cost of holding, ordering, and purchasing?

$57,550.

b. $49,200.

c. $47,550.

d. $41,550.

e. $37,550.

Expert Solution

jeff jeffy answered 7 months ago

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