What is the corresponding total annual cost

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Assignment:

A supermarket sells a given type of rice in bags of1 kg. The price charged by its supplier varies with the quantity ordered at a time, as follows:€0.6/bag, for quantities of less than 2000 bags;€0.55/bag for quantities between 2000 and 3999 bags;0.5€for amounts equal to or greater than 4000 bags. The cost of each order is€35, the weekly demand is 155 bags and the annual holding cost is18%of the unit cost.

1. What is the optimal order size for this item, and what is the corresponding total annual cost?

2. If the rice is valid for 24 weeks (counting from the time of order) and the lead time is 1 week, will the quantity to be ordered remain the same as in the previous question?

Reference no: EM133338548

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