Question

Quantity Discount: Consider a quantity discount problem where the yearly demand for the product is 1,286 units, the ordering cost is $47, the annual holding cost is 35% of the purchase price, and the price depends on the quantity as follows: Quantity Ordered Purchase Price per unit 0 to 199 units $66 each 200 to 4,999 units $44 each 5,000 or more $33 each Calculate the EOQ for the quantity range of 0 to 199 units (round to a whole number).

Answer 1

Answer:

EOQ = 72 units

Explanation:

Annual demand D = 1,286 units

Ordering cost S = $47

Holding percentage I = 35%

So, 0 - 199 units, the unit cost is $66

EOQ = $\sqrt{2DS/PI}$

EOQ = $\sqrt{(2 * 1286 * 47)/(66*0.35)}$

EOQ = $\sqrt{5233.07}$

EOQ = 72.33998613

EOQ = 72 units