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The KooKee bakery uses roughly 3,400 pounds of baking powder a year. KooKee currently purchases 300 pounds of baking powder per order and pays $3 per pound. The supplier of the baking powder has announced that orders of 1,000 pounds or more will be filled at a discount price of $2 per pound. KooKee incurs a cost of $100 each time it submits an order and the annual holding cost is 17 percent of the purchase price per pound.   If the supplier offered the discount at 1,500 pounds instead of 1,000 pounds, what order size would minimize total cost?

The KooKee bakery uses roughly 3,400 pounds of baking powder a year. KooKee currently purchases 300 pounds of baking powder per order and pays $3 per pound. The supplier of the baking powder has announced that orders of 1,000 pounds or more will be filled at a discount price of $2 per pound. KooKee incurs a cost of $100 each time it submits an order and the annual holding cost is 17 percent of the purchase price per pound.   If the supplier offered the discount at 1,500 pounds instead of 1,000 pounds, what order size would minimize total cost?

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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The KooKee bakery uses roughly 3,400 pounds of baking powder a year. KooKee currently purchases 300 pounds of baking powder per order and pays $3 per pound. The supplier of the baking powder has announced that orders of 1,000 pounds or more will be filled at a discount price of $2 per pound. KooKee incurs a cost of $100 each time it submits an order and the annual holding cost is 17 percent of the purchase price per pound.

 

If the supplier offered the discount at 1,500 pounds instead of 1,000 pounds, what order size would minimize total cost?

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