Question
In: Operations Management
The office manager for the Mankato Life Insurance company orders letterhead stationery from an office products...
The office manager for the Mankato Life Insurance company orders letterhead stationery from an office products firm. The companhy used 12000 boxes per year. Annual carrying cost is 30% of the price of a box of stationary, and ordering costs are $50 per order. The following discount price schedule is provided by the office company.
| Order Quantity (boxes) | Price per box |
| 1-1999 | $1.50 |
| 2000-4999 | 1.40 |
| 5000-9999 | 1.10 |
| 10000 or higher | 1.05 |
Determine the optimal quantity by showing all your work (steps).
Solutions
Expert Solution
EOQ = Sqroot{(2*Demand*Ordering Cost)/(Carrying Cost)}
= Sqroot{(2*12000*50)/0.3*1.05)
= 1951.8 or 1952 Approximately
keosha answered 2 years agoRelated Solutions
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