What would be the optimal order quantity

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Reference no: EM132300111

The WT Company needs to order a part from a supplier. The supplier has the following price schedule for the part. The parts cost $300 each for orders of 500 or fewer units; for orders between 500 and 1,000 units, the first 500 cost $300 each and the remaining amount cost $290 each; for quantities of 1,000 and over the first 500 cost $300 each, the next 500 cost $290 each, and the remaining amount cost $280 each. The accounting department estimates that the fixed cost of placing and order is $80, and holding costs are based on a 20% annual interest rate. Assuming a monthly demand rate of 150 units, what would be the optimal order quantity?

Reference no: EM132300111

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