Inventory policy over the policy currently being used

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Reference no: EM1395184

Keith Shoe Stores carries a basic black dress shoe for men that sells at an approximate constant rate of 500 pairs of shoes every 3 months. Keith's current buying policy is to order 500 pairs each time an order is placed. It costs Keith $30 to place an order. The annual holding cost rate is 20%. With an order quantity of 500, Keith obtains the shoes at the lowest possible unit cost of $28 per pair. Other quantity discounts offered by the manufacturer are as follows. What is the minimum-cost order quantity for the shoes? What are the annual savings of your inventory policy over the policy currently being used by Keith?

Order Quantity Price Per Pair

0-99                          $36
100-199    $32
200-299                    $30
300 or more              $28

Reference no: EM1395184

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