A store has an ordering cost of $250,a carrying cost of $4 per unit,annual product demand of 6,000 units,and it purchases product from a supplier for $500 per unit,however,the supplier has offered the store a discount price of $400 if it will purchase 1,200 units;the store's optimal order quantity is
A)866
B)1,200
C)756
D)945

Question

Quizplus · Accepted Answer

The optimal order quantity, given the significant discount for purchasing 1,200 units, makes this quantity the most cost-effective choice despite the traditional calculation of the Economic Order Quantity (EOQ). The discount outweighs the carrying cost and ordering cost considerations that would normally dictate the EOQ.

A Store Has an Ordering Cost of $250,a Carrying Cost