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Great ASEAN insurance company uses a lot of expensive multipart paper to process its claims. The printer from whom they receive the paper has informed them of discounts available for quantity orders, but the company doesn't have space to store the entire amount ordered at one time. The company would receive the paper from the printer at the rate of 40 boxes per week, and it uses the paper at the rate of 20 boxes per week. Annual demand is estimated at 2000 boxes. It costs RM10 to order the paper and it costs 10% of the acquisition cost to carry a box of paper for one year. The printer is offering the following discounts:
Range of Order Acquisition Cost
Quantities Per Box
1 - 100 RM15
101 - 250 RM13
251 + RM12
What is the EOQ for each acquisition cost in order? Determine the quantity to be ordered by the automobile insurance company to enable the company to achieve optimization.
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