You need to buy raw materials for your production process

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Reference no: EM132241551

You need to buy raw materials for your production process. You use 2,000 units of the raw material each year. The supplier quotes you a price of $9.50 per unit for an order size of 499 units or less, a price of $9 per unit for orders of 500 to 1499 units, and a price of $8.50 per unit for an order of 1,500 or more units. You assign an annual holding cost of 30% of the price of the unit to this inventory. Assume ordering cost is $60/order. What order quanitity would you use if the objective is to minimize total annual costs of holding, ordering, and purchasing ( be sure to identify total costs of 3 options)?

Please do work in Excel and show formulas.

Reference no: EM132241551

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