Question 4 Doris is an entrepreneur who purchases from wholesale suppliers and resells these items to her customers. She wishes to purchase cupcake boxes directly from a new supplier. She wants to determine the order quantity, Q, to meet the annual demand at the lowest cost. The price for the boxes depends on the quantity ordered as shown below. Price of cupcake boxes $0.82 per box up to 2,499 boxes: $0.81 per box between 2,500 and 5,000 boxes $0.80 per box for more than 5,000 boxes. The annual demand is estimated to be 50,000 boxes per year with holding cost of 20% of the price of the box. Ordering cost is fixed at $30.00. Calculate a. Determine which range is feasible. b. By calculating the total cost state, the number of boxes Doris should order.
Question 4 Doris is an entrepreneur who purchases from wholesale suppliers and resells these items to her customers. She wishes to purchase cupcake boxes directly from a new supplier. She wants to determine the order quantity, Q, to meet the annual demand at the lowest cost. The price for the boxes depends on the quantity ordered as shown below. Price of cupcake boxes $0.82 per box up to 2,499 boxes: $0.81 per box between 2,500 and 5,000 boxes $0.80 per box for more than 5,000 boxes. The annual demand is estimated to be 50,000 boxes per year with holding cost of 20% of the price of the box. Ordering cost is fixed at $30.00. Calculate a. Determine which range is feasible. b. By calculating the total cost state, the number of boxes Doris should order.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question 4. Please help with a & b. Thank you
Transcribed Image Text:Question 4
Doris is an entrepreneur who purchases from wholesale suppliers and resells
these items to her customers. She wishes to purchase cupcake boxes directly from
a new supplier. She wants to determine the order quantity, Q, to meet the annual
demand at the lowest cost. The price for the boxes depends on the quantity
ordered as shown below.
Price of cupcake boxes $0.82 per box up to 2,499 boxes:
$0.81 per box between 2,500 and 5,000 boxes
$0.80 per box for more than 5,000 boxes.
The annual demand is estimated to be 50,000 boxes per year with holding cost of
20% of the price of the box. Ordering cost is fixed at $30.00.
Calculate
a. Determine which range is feasible.
b. By calculating the total cost state, the number of boxes Doris should order.
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