2. Keith Shoes Stores carries a basic black dress shoe for men that sells at an approximatelyconstant rate of 500 pairs of shoes every three months. Keith's current buying policy is to order 500pairs each time an order is placed. It costs Keith $30 to place an order. The annual holding costrate is 20%. With the order quantity of 500, Keith obtains the shoes at the lowest possible unit costof $28 per pair. Other quantity discounts offered by the manufacturer are as follows. What is theminimum cost order quantity for the shoes? What is the annual savings of your inventory policyover the policy currently being used by Keith?Order Quantity0-99100-199200-299300 or morePrice per Pair$36$32$30$28

Demand = 500 pairs every three months Annual demand(D) = 500 x 4 = 2000 pairs ( As 1 year is equal…

Answered: of $28 per pair. Other quantity…

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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of $28 per pair. Other quantity discounts offered by the manufacturer are as follows. What is the minimum cost order quantity for the shoes? What is the annual savings of your inventory policy over the policy currently being used by Keith?