Process of deciding the optimal order quantity

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Reference no: EM132244215

You are in the process of deciding the optimal order quantity of shampoo packs for a hotel. The supplier charges you $52.0 per order and your stockroom costs approximately $0.27 per shampoo pack per year to store the product. Based on prior research, you were able to determine that the hotel goes through approximately 120 shampoo packs per day. The supplier is willing to give the following quantity discounts for the product:

Quantity Price

1 – 1500 $2.65

1501 – 6000 $2.09

6001+ $1.55

What is the optimal order quantity that will allow you to minimize total (order + carrying) costs? What is the lowest total cost if you decide to take advantage of price discounts?

Reference no: EM132244215

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