The Toledo Mudhens, a minor league baseball team, breaks an average of seven bats per week during a 38 week season. The team purchases it bats from a national supplier. The order cost is $185 and the annual holding cost is 24 percent of the purchase price.
- What is the annual demand for bats?
- If bats cost $25.00 each, what is the economic order quantity for bats?
- What is the total annual cost associated with the EOQ quantity?
- What impact will an increase to $295 in the order cost have on the EOQ quantity?
- Suppose the Mudhens break an average of 9 bats per week during the season, what impact will this have on the EOQ quantity? (Assume the order cost is $175)
Assume the bat manufacturer offers the Mudhens the following price schedule
Order Quantity Price per Unit
1 – 49 $25.00
50 - 143 $24.00
144 or more $23.50
- How many bats should the team order if the discount applies to all units?
- What is the total annual cost associated with the best order quantity?