Determine optimal order quantity-minimum total annual cost

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Reference no: EM131712129

A company sells greeting cards. The anticipated demand for greeting cards is 100 each year. The cost of placing an order for is $10. The holding cost is $20 per card per year. (Shortages not allowed.) When the company places an order, it must pay $1.44 for each of the first 10 cards it orders. If the company places an order for more than 10 cards, it still has to pay $1.44 per card for the first 10, but then it pays $1.00 for each card after that. Assume that the EOQ Model assumptions hold. Additionally, the same quantity Q is ordered each time an order is placed.

(a) Determine the optimal order quantity.

(b) Determine the minimum total annual cost.

Item 1 /// Item 2 //// Item 3

λj ::: 1850 /// 1150 //// 800

cj ::: 50 //// 350 //// 85

Kj ::: 100 //// 150 //// 50

hj ::: 10.8108 //// 104.3478 //// 12.5000

Reference no: EM131712129

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