QUESTION 3 a. Delightful Coffee Limited (DCLL) purchases coffee from Hopeful Harvest Plantations (HHP) in Santa Cruz, Trinidad. HHP sells coffee at four (4) different prices, depending on the size of the order, as shown in Table 3 (below): Table 3. Hopeful Harvest Plantations - Coffee prices Weight of Coffee Price ($USD) Less than 45 kilograms $18 per kilogram 45 to 449 kilograms $17 per kilogram, 450 to 1000 kilograms $16 per kilogram More than 1000 kilograms $15 per kilogram The cost to place an order at DCLL is $50. Annual demand is 4,500 units. The holding (or carrying) cost is 20 percent of the material price. (iii) What is the economic order quantity that DCLL should buy each time?
QUESTION 3
a. Delightful Coffee Limited (DCLL) purchases coffee from Hopeful Harvest Plantations (HHP)
in Santa Cruz, Trinidad. HHP sells coffee at four (4) different prices, depending on the size of
the order, as shown in Table 3 (below):
Table 3. Hopeful Harvest Plantations - Coffee prices
Weight of Coffee Price ($USD)
Less than 45 kilograms $18 per kilogram
45 to 449 kilograms $17 per kilogram,
450 to 1000 kilograms $16 per kilogram
More than 1000 kilograms $15 per kilogram
The cost to place an order at DCLL is $50. Annual demand is 4,500 units. The holding (or
carrying) cost is 20 percent of the material price.
(iii) What is the economic order quantity that DCLL should buy each time?
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