A local nursery, Greens, uses 1,720 bags of plant food annually. Greens works fifty-two weeks per year. It costs $12 to place an order for plant food. Lead time is one week. Rapid Grower, the supplier of plant food for Greens, has offered the following quantity discounts. If the nursery places orders of 60 bags or less, the cost per bag is $25. For orders greater than 60 bags but less than 100 bags, the cost per bag is $23. For orders of 100 bags or more, the cost is $22 per bag. Greens estimates its holding cost to be 25 percent of the unit price. Determine the most cost-effective ordering policy for Greens. Optimal ordering policy is to order bags at a time.

A local nursery, Greens, uses 1,720 bags of plant food annually. Greens works fifty-two weeks per year. It costs $12 to place an order for plant food. Lead time is one week. Rapid Grower, the supplier of plant food for Greens, has offered the following quantity discounts. If the nursery places orders of 60 bags or less, the cost per bag is $25. For orders greater than 60 bags but less than 100 bags, the cost per bag is $23. For orders of 100 bags or more, the cost is $22 per bag. Greens estimates its holding cost to be 25 percent of the unit price. Determine the most cost-effective ordering policy for Greens. Optimal ordering policy is to order bags at a time.

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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