Determine the optimal order quantity

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Reference no: EM131712115

Consider the EOQ model with all-unit cost discounts determined by the following:

Order Size /// Price per Item

Q < b /// $38.50

Q ≥ b /// $32.25

for some constant price break point b.

The annual holding cost is 6.71% of the purchasing cost. There is an overhead cost of $9 for each order placed, and the annual demand is 60 items.

(a) If b = 65, determine the optimal order quantity.

(b) If b = 40, determine the optimal order quantity.

(c) Determine the value of b such that there are two optimal order quantities. For this value of b, determine the two optimal order quantities.

Reference no: EM131712115

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