4. The I-75 Carpet Discount Store has an annual demand of 10,000 yards of Super Shag...

4. The I-75 Carpet Discount Store has an annual demand of 10,000 yards of Super Shag carpet. The annual carrying cost for a yard of this carpet is $0.75, and the ordering cost is $150. The carpet manufacturer normally charges the store $8 per yard for the carpet; however, the manufacturer has offered a discount price of $6.50 per yard if the store will order 5,000 yards. How much should the store order, and what will be the total annual inventory cost for that order quantity?
5. The office manager for the Gotham Life Insurance Company orders letterhead stationery from an office products firm in boxes of 500 sheets. The company uses 6,500 boxes per year. Annual carrying costs are $3 per box, and ordering costs are $28. The following discount price schedule is provided by the office supply company:

Order Quantity (in boxes)	Price per Box
200-999	$16
1000-2999	$14
3000-5999	$13
6000+	$12

a. Determine the optimal order quantity and the total annual inventory cost.
b. Determine the optimal order quantity and total annual inventory cost for boxes of stationery if the carrying cost is 20% of the price of a box of stationery.

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Expert Solution

Answer:--- Date:--01/06/2019

orchestra answered 1 year ago

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