ABC company uses 8,000 pens every year. For each pen, cach order cost is $30 and the annual holding cost is 10 per cent of unit cost. The unit cost depends on the quantity ordered as follows: Quantity Unit Cost (S) 20 1-199 200-499 18 500-799 16 800+ 12 > Assume that demand has a constant rate and do not stockout; a) What is the optimal order size? b) Determine the yearly order quantity
ABC company uses 8,000 pens every year. For each pen, cach order cost is $30 and the annual holding cost is 10 per cent of unit cost. The unit cost depends on the quantity ordered as follows: Quantity Unit Cost (S) 20 1-199 200-499 18 500-799 16 800+ 12 > Assume that demand has a constant rate and do not stockout; a) What is the optimal order size? b) Determine the yearly order quantity
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:ABC company uses 8,000 pens every year. For each pen, cach order cost is $30 and the annual holding
cost is 10 per cent of unit cost. The unit cost depends on the quantity ordered as follows:
Quantity
1-199
Unit Cost (S)
20
200-499
18
500-799
16
800+
12
> Assume that demand has a constant rate and do not stockout;
a) What is the optimal order size?
b) Determine the yearly order quantity
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