Introduction in the production of rebars

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Reference no: EM132304208

Introduction In the production of rebars, carbon steel is melted down through a furnace, is molded and elongated into very hot rods, and are then pushed through the rolling mills which determines the sizes and lengths of the bars as appropriate. The annual demand for Carbon steel is 40,000 pounds. Its ordering cost is $ 30.00 while it’s holding cost is 20% per unit per year of the price of Carbon Steel. Carbon steel are sold at discounted prices as follows:

Quantity range ----- Cost (C)

Less than 2500 pounds ----- $ 0 .82 per pound

2500 to 5000 pounds ----- $ 0.81 per pound

5000 or more pounds ----- $ 0.80 per pound

1. Which is the best order size or quantity that should be ordered and at what cost?

2. What will be the total annual cost?

(Please show your solutions and comparative annual costs to justify your choice.)

Reference no: EM132304208

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