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r year. The ordering cost for each order is $40, and cost is 20% of the purchase price of the tires per ye rchase price is $20 per tire if fewer than 500 tires a , $18 per tire if 500 or more-but fewer than 1,000-ti ered, and $17 per tire if 1,000 or more tires are ordere many tires should Rocky Mountain order each time s an order?

r year. The ordering cost for each order is $40, and cost is 20% of the purchase price of the tires per ye rchase price is $20 per tire if fewer than 500 tires a , $18 per tire if 500 or more-but fewer than 1,000-ti ered, and $17 per tire if 1,000 or more tires are ordere many tires should Rocky Mountain order each time s an order?

Practical Management Science
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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**Problem 12.25:** Rocky Mountain Tire Center sells 20,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 20% of the purchase price of the tires per year. The purchase price is $20 per tire if fewer than 500 tires are ordered, $18 per tire if 500 or more—but fewer than 1,000—tires are ordered, and $17 per tire if 1,000 or more tires are ordered. a) How many tires should Rocky Mountain order each time it places an order? b) What is the total cost of this policy?
Transcribed Image Text:**Problem 12.25:** Rocky Mountain Tire Center sells 20,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 20% of the purchase price of the tires per year. The purchase price is $20 per tire if fewer than 500 tires are ordered, $18 per tire if 500 or more—but fewer than 1,000—tires are ordered, and $17 per tire if 1,000 or more tires are ordered. a) How many tires should Rocky Mountain order each time it places an order? b) What is the total cost of this policy?
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