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You’ve been tasked to qualify a new vendor, Baker Manufacturing, to provide a component for a regulator. Your anticipated monthly demand is 600 units. Your ordering costs is $50.00 and your holding cost per unit per year is $5.00. Baker is offering quantity discounts and has submitted the following schedule:
a. What is the EOQ?
b. Determine the price point that provides the lowest total annual cost and what is that cost?
A. EOQ = 379.471
B. Order Quantity – 800 at price 15.1 and total cost – 111170