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Based on the information in the chart I calculated below, what is the Answer to A & B. A)

Based on the information in the chart I calculated below, what is the Answer to A & B. A)

Based on the information in the chart I calculated below, what is the Answer to A & B.

A) What order quantity will allow the wholesale distributor to minimize total annual inventory costs (Purchase Cost + Ordering Cost + Holding Cost) by taking advantage of the proposed discount pricing?

B) What is the total annual cost (Purchase Cost + Ordering Cost + Holding Cost) based upon taking advantage of the proposed discount pricing?

Quantity Discount Model

VariablesDiscount NumberDiscount Minimum QtyDiscount Maximum QtyDiscountDiscount CostEOQQPurchase CostOrdering CostHolding CostTotal CostAnnual demandD5,4751010000.00%$ 125.00661.8157661.82$    684,375.00$827.27$       827.27$       686,029.54Purchase cost per unitC$125.0021001200010.00%$ 112.50697.6151001.00$    615,937.50$546.95$   1,126.13$       617,610.58Holding or carrying cost per unit per yearCh$2.5032001None15.00%$ 106.25717.83992001.00$    581,718.75$273.61$   2,126.06$       584,118.43Ordering cost per orderCo$100Holding or carrying cost as a percentage of unit costI2.00%

Abhinav 03-Dec-2019

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