Office Supplies, Inc. sells discounted office supplies over the Internet. One popular product sold is legal-size notepads, which are ordered by many law firms. Office Supplies offers the following quantity discount structure, based on how many dozen notepads are ordered: 1-19 dozen, $21.95 per dozen; 20-99, $19.95 per dozen; 100-199, $18.95 per dozen; 200+, $17.95 per dozen. A law firm would like to decide how many legal notepads to order using the EOQ model for quantity discounts. Its ordering cost is $35 per order, its anticipated need in the coming year is for 1,500 dozen notepads, and its annual carrying cost rate is 40% of acquisition cost. How many dozen notepads should they order each time? What would be the resulting total inventory cost per year (ordering plus carrying plus materials)?

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Asked Oct 17, 2019
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Office Supplies, Inc. sells discounted office supplies over the Internet. One popular product sold is legal-size notepads, which are ordered by many law firms. Office Supplies offers the following quantity discount structure, based on how many dozen notepads are ordered: 1-19 dozen, $21.95 per dozen; 20-99, $19.95 per dozen; 100-199, $18.95 per dozen; 200+, $17.95 per dozen. A law firm would like to decide how many legal notepads to order using the EOQ model for quantity discounts. Its ordering cost is $35 per order, its anticipated need in the coming year is for 1,500 dozen notepads, and its annual carrying cost rate is 40% of acquisition cost. How many dozen notepads should they order each time? What would be the resulting total inventory cost per year (ordering plus carrying plus materials)?

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Determine the dozen notepads that the firm s...

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Quantity Price per unit Carrying cost EOQ 1-19 21.95 8.78 109.4 19.95 20-99 7.98 114.7 18.95 7.58 100-199 117.7 200+ 120.9 17.95 7.18 Quantity Price per unit Carrying cost 1-19 21.95 20-99 19.95 100-19918.95 200+17.95 ЕOQ -SQRT(2*1500*35)E4) |-SQRT(2 1500*35) E5) =SQRT(2 1500*35)E6) =SQRT(2*1500*35)E7) 0.4 D4 -0.4*D5 -0.4*D6 -0.4*D7 The EOQ in the third row is correctly fix within the quality in first row. Hence, Economic Order Quantity is 118 (rounded off.

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