Quantity discount affects holding cost per set per time

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Reference no: EM132248272

Cafeteria is going to purchase plastic sets of fork, knife, spoon for the people who buy “to go” lunch. For orders less than 100 sets, the cafeteria is charged 30 cents per set. For orders more than 100 but fewer than 500, the cafeteria is charged 20 cents per set. For orders above 500, the cafeteria is charged 15 cents per set. Suppose that ordering cost is $8 per order, holding cost per set per year is 20% of the price of the set. Annual plastic set demand is constant at 900.

C1: x <= 500

C2: X > 500 <= 1,000

C3: X > 1,000

a) Set up the problem: What are the costs and demands (S, H, D)? Also decide whether the quantity discount affects the holding cost per set per time.

b) Compute the EOQ quantity.

c) Find the optimal number of sets to purchase.

Reference no: EM132248272

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