The Interstate Carpet Discount Store has annual demand of10,000 yards of Super Shag carpet. The annual carrying costfor a yard of this carpet is $1.25, and the ordering cost is$300. The carpet manufacturer normally charges the store $8per yard for the carpet. However, the manufacturer has offered a discount price of $6.50 per yard if the store will order5000 yards. How much should the store order, and what willbe the total annual inventory cost for that order quantity?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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The Interstate Carpet Discount Store has annual demand of
10,000 yards of Super Shag carpet. The annual carrying cost
for a yard of this carpet is $1.25, and the ordering cost is
$300. The carpet manufacturer normally charges the store $8
per yard for the carpet. However, the manufacturer has offered a discount price of $6.50 per yard if the store will order
5000 yards. How much should the store order, and what will
be the total annual inventory cost for that order quantity?

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