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A manufacturing firm has been offered a particular component part it uses cording to the following discount pricing schedule provided by the supplier. Quantity 1-500 501-999 2 1000 Unit Price $5 $4.5 $3.9 he manufacturing company uses 10000 of the components annually. The ordering cost for ea -der is $20, and the unit holding cost is 20% of the purchase price of the component per year. What is the ontimal order quantity?

A manufacturing firm has been offered a particular component part it uses cording to the following discount pricing schedule provided by the supplier. Quantity 1-500 501-999 2 1000 Unit Price $5 $4.5 $3.9 he manufacturing company uses 10000 of the components annually. The ordering cost for ea -der is $20, and the unit holding cost is 20% of the purchase price of the component per year. What is the ontimal order quantity?

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
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1. A manufacturing firm has been offered a particular component part it uses according to the following discount pricing schedule provided by the supplier. Quantity Unit Price $5 $4.5 1-500 501-999 > 1000 $3.9 The manufacturing company uses 10000 of the components annually. The ordering cost for each order is $20, and the unit holding cost is 20% of the purchase price of the component per year. a) What is the optimal order quantity? b) What is the total annual cost, including ordering, holding and purchasing?
Transcribed Image Text:1. A manufacturing firm has been offered a particular component part it uses according to the following discount pricing schedule provided by the supplier. Quantity Unit Price $5 $4.5 1-500 501-999 > 1000 $3.9 The manufacturing company uses 10000 of the components annually. The ordering cost for each order is $20, and the unit holding cost is 20% of the purchase price of the component per year. a) What is the optimal order quantity? b) What is the total annual cost, including ordering, holding and purchasing?
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