Item costs associated with quantity

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Reference no: EM13967857

Dave's Sporting Goods sells Mountain Mouse freeze dried meals. Dave's uses a continuous review system to manage meal inventories. Suppose Mountain Mouse offers the following volume discounts to its customers:

1-500 meals: $7 per meal

501 or more meals: $6.50 per meal

Annual demand is 2000 meals, and the cost to place an order is $15. Suppose the holding cost is $2 per meal per year. How many meals should Dave's order at a time? What are the total holding, ordering, and item costs associated with this quantity?

Reference no: EM13967857

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