Microsoft Word - Solutions_quiz_3_Fall_08

Microsoft Word - Solutions_quiz_3_Fall_08 - Section: 8 am...

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Section : 8 am 10 am Name:___SOLUTIONS ___________ (Circle one) 1 BUAD 311T QUIZ #3 Fall 2008 1. A supplier to USC Hospitals has introduced quantity discounts to encourage large order quantities for a special bandage. The price schedule is as follows USC Hospitals estimates that its annual demand for this item is 6000 units, its ordering cost is $10 per order, and its annual holding cost is 20% of the per unit purchase price. What is the optimal order quantity? (20 points) λ =6000 units per year K=$10 per order When c=$1.60, h=0.2*1.60=$0.32 per unit-year and units Q 37 . 612 32 . 0 10 ) 6000 ( 2 * = = Ö Not feasible When c=$1.40, h=0.2*1.40=$0.28 per unit-year and units Q 65 . 654 28 . 0 10 ) 6000 ( 2 * = = Ö Not feasible When c=$1.20, h=0.2*1.20=$0.24 per unit-year and units Q 10 . 707 24 . 0 10 ) 6000 ( 2 * = = Ö Feasible Order Quantity:________707.1 units _________ Order Quantity Price per Unit 0 to 199 $1.60 200 to 399 $1.40 400 or more $1.20
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Section : 8 am 10 am Name:___SOLUTIONS ___________ (Circle one)
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This note was uploaded on 07/21/2009 for the course BUAD 311T taught by Professor Vaitsos during the Fall '07 term at USC.

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Microsoft Word - Solutions_quiz_3_Fall_08 - Section: 8 am...

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