What is the sum of their annual ordering and holding costs

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Reference no: EM131734635

Millennium Liquors is a wholesaler of sparkling wines. Their most popular product is the French Bete Noire which is shipped directly from France. Weekly demand is for 50 cases. Millennium purchases each case for $125, there is a $325 fixed cost for each order (independent of the quantity ordered) and their annual holding cost is 25 percent.

a. What order quantity minimizes Millennium’s annual ordering and holding costs?

b. If Millennium chooses to order 300 cases each time, what is the sum of their annual ordering and holding costs?

Round answer to 2 decimal places.

c. If Millennium chooses to order 125 cases each time, what is the sum of the ordering and holding costs incurred by each case sold?

d. If Millennium is restricted to order in multiples of 50 cases (e.g., 50, 100, 150, etc.) how many cases should they order to minimize their annual ordering and holding costs?

e. Millennium is offered a 5% discount if they purchase at least 1,000 cases. If they decide to take advantage of this discount, what is the sum of their annual ordering and holding costs?

Reference no: EM131734635

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