SBC company has demand for 1,000 pumps each year. The cost of a pump is $50, it costs $40 to place an order with their supplier, and the cost of holding the item in inventory for a year is 25% of the unit cost. The supplier just Informed the SBC that. If pumps are ordered in quantities of 200 units or more that they will receive a 3% discount, How many pumps should SBC order from their supplier each time they place an order to minimize its expected iotal annual cost for this Item?
SBC company has demand for 1,000 pumps each year. The cost of a pump is $50, it costs $40 to place an order with their supplier, and the cost of holding the item in inventory for a year is 25% of the unit cost. The supplier just Informed the SBC that. If pumps are ordered in quantities of 200 units or more that they will receive a 3% discount, How many pumps should SBC order from their supplier each time they place an order to minimize its expected iotal annual cost for this Item?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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SBC company has demand for 1,000 pumps each year. The cost of a pump is $50, it costs $40 to place an order with their supplier, and the cost of holding the item in inventory for a year is 25% of the unit cost. The supplier just Informed the SBC that. If pumps are ordered in quantities of 200 units or more that they will receive a 3% discount, How many pumps should SBC order from their supplier each time they place an order to minimize its expected iotal annual cost for this Item?
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