Problem: ABC Company is a manufacturer of electronic components. They order resistors from a supplier in bulk at a discounted price per unit. The following table shows the quantity discounts offered by the supplier: Order Quantity (Units) Price per Unit 1-99 $10 100-499 $9.50 500-999 $9.00 1,000+ $8.50 drive_spreadsheetExport to Sheets ABC Company estimates their annual demand for resistors to be 12,000 units. The carrying cost for holding inventory is 20% per year of the unit cost. The ordering cost is $50 per order. Objective: Determine the optimal order quantity that minimizes the total cost of inventory management for ABC Company.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Problem:

ABC Company is a manufacturer of electronic components. They order resistors from a supplier in bulk at a discounted price per unit. The following table shows the quantity discounts offered by the supplier:

Order Quantity (Units) Price per Unit
1-99 $10
100-499 $9.50
500-999 $9.00
1,000+ $8.50
drive_spreadsheetExport to Sheets

ABC Company estimates their annual demand for resistors to be 12,000 units. The carrying cost for holding inventory is 20% per year of the unit cost. The ordering cost is $50 per order.

Objective:

Determine the optimal order quantity that minimizes the total cost of inventory management for ABC Company.

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