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A computing company manufacturers an inexpensive audio card (Audio Max) for assembly into several moderls of its microcomputers. The annual demand for this part is 600 units. The cost of preparing an order and making production set up is S = $20/order, while the unit holding cost per year is equal to 30% of the item price. The supplier has now offered the computing comapny the following quantity discount schedule. What should the order quantity be in order to minimize the annual total cost

A computing company manufacturers an inexpensive audio card (Audio Max) for assembly into several moderls of its microcomputers. The annual demand for this part is 600 units. The cost of preparing an order and making production set up is S = $20/order, while the unit holding cost per year is equal to 30% of the item price. The supplier has now offered the computing comapny the following quantity discount schedule. What should the order quantity be in order to minimize the annual total cost

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A computing company manufacturers an inexpensive audio card (Audio Max) for assembly into several moderls of its microcomputers. The annual demand for this part is 600 units. The cost of preparing an order and making production set up is S = $20/order, while the unit holding cost per year is equal to 30% of the item price. The supplier has now offered the computing comapny the following quantity discount schedule. What should the order quantity be in order to minimize the annual total cost?

Quantity Price 1 to 49 50 to 249 250 and up $5.00 per unit $4.50 per unit $4.10 per unit
Transcribed Image Text:Quantity Price 1 to 49 50 to 249 250 and up $5.00 per unit $4.50 per unit $4.10 per unit
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Why was answer 500? Shouldnt it be 250? How did you get quantities on the left hand column of 49 and 250?

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