Reference no: EM132870199

Problem -E Office Supplies dozen Discount per Dozen - sells discounted office suppliers over the internet. One popular product sold is legal-size notepads. The current price is $20.00 per dozen, however, E Office Supplies offers a discount based on the quantity bought. E Office Supplies offers the following quantity discount (per dozen) structure based on how many notepads are ordered:

Order Size

1-600 dozen

601-999 dozen

1000-1999 dozen

2000+ dozen

$0.40 per dozen

$0.44 per dozen

$0.47 per dozen

The STHDS law firm wants to decide how many legal notepads to order using the EOQ model for quantity discounts. Its ordering cost is $200 per order, its anticipated need (demand) in the coming year is for 180,000 notepads, and its annual holding cost is 40 percent of the acquisition cost. Assume that shipments are received instantaneously, demand is known and the usage constant, and the lead time is known and constant.

Required -

a) Based on the lowest total annual cost (ordering plus holding plus acquisition cost), how many dozen notepads should STHDS order each time?

b) What is the total annual cost (ordering plus holding plus acquisition cost) per year for this order quantity?

c) What is the lowest total annual cost (ordering plus holding plus acquisition cost) for each of the price points?