How many chairs should the firm order each time

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Reference no: EM132688401

Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information:

Average demand = 20 units per day

Average lead time = 30 days

Item unit cost = $50 for orders of less than 200 units

Item unit cost = $48 for orders of 200 units or more

Ordering cost = $25

Inventory carrying cost = 25%

The business year is 250 days

Assume there is no uncertainty at all about the demand or the lead time.

Question a. What will be the total costs for each alternative? (Round your answers to 2 decimal places.)

Question b. How many chairs should the firm order each time?

Question c. How much the firm can save annually by using the order quantity in Part b. instead of the first EOQ shown in Part a? (Round your answer to 2 decimal places.)

Reference no: EM132688401

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