20180530121848624.pdf - 1(30 points Additional workspace is...

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Unformatted text preview: 1. (30 points) Additional workspace is provided on the next page. E Oflice Supplies sells discounted office suppliers over the Internet. One popular product sold is legal-size notepads. E Office Supplies offers the following quantity discount structure, based on how many dozen notepads are ordered: 1-19 dozen 20—99 dozen 100-199 dozen 200+ $21.95 per dozen $19.95 per dozen $18.95 per dozen $17.95 per dozen The STHDS law finn wants 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 (demand) in the coming year is for 1,500 dozen notepads, and its annual holding cost is 40 percent of the acquisition cost. Assume that shipments are received instantaneously, demand is known and the usage constant, and the lead time is known and constant. a) Based on the lowest total annual cost (ordering plus holding plus acquisition cost), how many dozen notepads should STHDS order each time? b) What is the resulting total annual cost (ordering plus holding plus acquisition cost) per year for this order quantity? c) What is the total annual cost (ordering plus holding plus acquisition cost) of the next best ordering cost option? ...
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  • Summer '08
  • THOMAS
  • Discounts and allowances, total annual cost, E Office Supplies, dozen notepads

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