Computation of economic order quantity

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Reference no: EM1315858

Computation of Economic Order quantity of Books for college.

The bookstore at Smith College purchases sport shirts with the college logo to sell from a local vendor. The vendor sells the sport shirts to the college for $38 each. The cost to the bookstore for placing each order is $120. The carrying cost is $5.20 per shirt per year. The bookstore estimates that 1700 sport shirts will be sold over the next year and does not want any shortages. The bookstore sells the shirt for $50 each. There are 260 business days a year for the bookstore. Lead time for filling an order once placed is 2 weeks. The vendor has offered the College Bookstore the following discounts:

Order Size	Discount % of Order	Cost of Shirts from Vendor
1-299	0% discount	$38
300-499	2% discount	$37.24
500-799	4% discount	$36.48
800+	6% discount	$35.72

What is their expected total inventory cost (excluding the unit cost of the shirts)?

Reference no: EM1315858

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