Managing Supply Chain and Operations 1st Edition by Thomas Foster ,Scott Sampson,Cynthia Wallin,Scott Webb

Exercise 48

Suppose that the annual demand for a component is approximately 60,000 units. The company orders the component from a supplier who has offered the following quantity discount schedule.

If the company's carrying charge is 15% of the item's price and the cost per order is $150, determine the order quantity that would minimize the total related inventory costs for this component.