Develop a graph of the average cost per unit

Assignment Help Management Theories

Reference no: EM131463337

Question: Consider the carload discount schedule pictured in Figure 4-13 (page 225). Suppose M = 500 units, C = $10 per unit, and a full carload of 500 units costs $3,000.

a. Develop a graph of the average cost per unit, C(Q)Q, assuming this schedule.

b. Suppose that the units are consumed at a rate of 800 per week, order setup cost is $2,500, and holding costs are based on an annual interest charge of 22 percent. Graph the function G(Q) = λC(Q)/Q + Kλ/Q + I(C(Q)/Q/Q/2 and find the optimal value of Q. (Assume that 1 year = 50 weeks.)

c. Repeat part (b) for = 1,000 per week and K = $1,500.

Reference no: EM131463337

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