Compute the total yearly cost if firm orders in EOQ amounts

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Reference no: EM13965541

Spokane Public Power Co. purchases transformers at a cost of $330 and uses an ordering cost of $45 per order. Inventory is carried at a cost of 10 percent of the per-unit price (based on average inventory). Storage costs, based upon adequate space for maximum inventory, are $6 per transformer. Annual demand is 800 units.

A) Compute the total yearly cost if the firm orders in EOQ amounts.

B) The supplier has offered the power company a 10 percent discount for purchasing in quantities of 200. Assuming this affects all costs except ordering and per-unit storage costs, compute the total yearly cost for this quantity discount situation.

Reference no: EM13965541

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