The annual demand, ordering cost, and the inventory carrying cost rate for a certain item are D = 600 units, S = $20/order and I = 30% of item price. Price is established by the following quantity discount schedule. What should the order quantity be in order to minimize the total annual cost?
$$\begin{array} { | l | l | l | l | }
\hline\text { Quantity } & 1 \text { to } 49 & 50 \text { to } 249 & 250 \text { and up } \
\hline \text { Price } & \$ 5.00 \text { per unit } & \$ 4.50 \text { per unit } & \$ 4.10 \text { per unit } \
\hline
\end{array}$$

Question

The annual demand, ordering cost, and the inventory carrying cost rate for a certain item are D = 600 units, S = $20/order and I = 30% of item price. Price is established by the following quantity discount schedule. What should the order quantity be in order to minimize the total annual cost?
 $$\begin{array} { | l | l | l | l | } 
\hline\text { Quantity } & 1 \text { to } 49 & 50 \text { to } 249 & 250 \text { and up } \
\hline \text { Price } & \$ 5.00 \text { per unit } & \$ 4.50 \text { per unit } & \$ 4.10 \text { per unit } \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Answer of The annual demand, ordering cost, and the inventory carrying cost rate for a certain item are D = 600 units, S = $20/order and I = 30% of item price. Price is established by the following quantity discount schedule. What should the order quantity be in order to minimize the total annual cost?
 $$\begin{array} { | l | l | l | l | } 
\hline\text { Quantity } & 1 \text { to } 49 & 50 \text { to } 249 & 250 \text { and up } \
\hline \text { Price } & \$ 5.00 \text { per unit } & \$ 4.50 \text { per unit } & \$ 4.10 \text { per unit } \
\hline
\end{array}$$

The Annual Demand, Ordering Cost, and the Inventory Carrying Cost