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A manufacturer of engines is required to purchase 2400 casting per year. This requirement is assumed to be fixed and known. The manufacturer is given a lower price for quantity purchased within certain ranges.
The problem is to determine the optimal purchase quantity.
The following data are given:
Time period T = 12 months
Total demand R= 2400 units.
I =2%
Set up cost per procurement, C3 = Rs.350
K11 = Rs.10 0≤q≤500
K12 = Rs. 9.25 q≥500
Also if setup cost of procurement is 100 only find the optimal order quantity
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