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Miguel has a product with an annual holding cost percentage of 20%, an ordering cost of $110 per order, and annual demand of 15,000 units. The following price schedule applies to the product from a supplier. What is the optimal order quantity? Show all work including a graph.Units              Price                      1-250             $30.00                                    251-500         $28.00501-750         $26.00                                   ≥ 751              $25.00

Question
  1. Miguel has a product with an annual holding cost percentage of 20%, an ordering cost of $110 per order, and annual demand of 15,000 units. The following price schedule applies to the product from a supplier. What is the optimal order quantity? Show all work including a graph.

Units              Price                     

1-250             $30.00                                    

251-500         $28.00

501-750         $26.00                                  

≥ 751              $25.00                                  

 

 

 

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Step 1

The following table shows that calculation of optimal order quantity and total cost:

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Step 2

The following table shows the formula to determine the total cost and optimal order quantity:

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Step 3

The following figure shows the graphical representation of quanti...

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