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In: Operations Management

An annual demand for an item is 500 units, ordering cost is 8 $, inventory carrying...

An annual demand for an item is 500 units, ordering cost is 8 $, inventory carrying interest is 20% of the purchase price per year. Purchase prices are as follows as proposed by the vendor/supplier; where the value of unit cost=10 without any discount?

Discount 0% 000≤Q<300   
Discount 2% 300≤Q<450
Discount 3% 450≤Q

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Expert Solution

Hi,

Please find answer as below.

Answer

To incur a loe carrying and ordering cost of the inventory, material should be ordered as per Economic Ordering Quantity.

Here, Economic Order Quantity is 64 units, hence there wont be any discount in price.

FInd solution as below .

keosha answered 4 months ago
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