Recently, a kiddie store has been given a quantity discount schedule for these cats. Thus, the normal cost for the toy cars is P200.00. For orders betweeen 1,000 and 1,999 units, the unit cost drops to P192.00. For orders of 2,000 or more units, the unit cost is only P190.00. Furthermore, ordering cost is P1,960.00 per order. Annual demand is 5,000 toy cars, and inventory carrying charge, as a percentage of cost, I, is 20%. What order size quantity will minimize the total inventory cost?

Recently, a kiddie store has been given a quantity discount schedule for these cats. Thus, the normal cost for the toy cars is P200.00. For orders betweeen 1,000 and 1,999 units, the unit cost drops to P192.00. For orders of 2,000 or more units, the unit cost is only P190.00. Furthermore, ordering cost is P1,960.00 per order. Annual demand is 5,000 toy cars, and inventory carrying charge, as a percentage of cost, I, is 20%. What order size quantity will minimize the total inventory cost?

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Description: Recently, a kiddie store has been given a quantity discount schedule for these cats. Thus, the normal cost for the toy cars is P200.00. For orders betweeen 1,000 and 1,999 units, the unit cost drops to P192.00. For orders of 2,000 or more units, the

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter3: Introduction To Optimization Modeling

Section3.8: A Multiperiod Production Model

Problem 22P

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