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Surge Electric uses 4,000 toggle switches a year. Switches are priced as follows: 1 to 499, 90 cents each; 500 to 999, 85 cents each; and 1,000 or more, 80 cents each. It costs approximately $30 to prepare an order and receive it, and carrying costs are 40 percent of purchase price per unit on an annual basis.

Surge Electric uses 4,000 toggle switches a year. Switches are priced as follows: 1 to 499, 90 cents each; 500 to 999, 85 cents each; and 1,000 or more, 80 cents each. It costs approximately $30 to prepare an order and receive it, and carrying costs are 40 percent of purchase price per unit on an annual basis.

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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Surge Electric uses 4,000 toggle switches a year. Switches are priced as follows: 1 to 499, 90 cents each; 500 to 999, 85 cents each; and 1,000 or more, 80 cents each. It costs approximately $30 to prepare an order and receive it, and carrying costs are 40 percent of purchase price per unit on an annual basis. Determine the optimal order quantity and the total annual cost.
Transcribed Image Text:Surge Electric uses 4,000 toggle switches a year. Switches are priced as follows: 1 to 499, 90 cents each; 500 to 999, 85 cents each; and 1,000 or more, 80 cents each. It costs approximately $30 to prepare an order and receive it, and carrying costs are 40 percent of purchase price per unit on an annual basis. Determine the optimal order quantity and the total annual cost.
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