Solved: ANSWER AND EXPLAIN ALL ANSWERS IN DETAIL!!! PLEASE SHOW WORK WHEREVER POSSIBLE

LEASE ANSWER AND EXPLAIN ALL ANSWERS IN DETAIL!!! PLEASE SHOW WORK WHEREVER POSSIBLE AS WELL!!!

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:

Quantity Unit Price
1-399 $16.10
400-799 $15.60
>800 $15.10

a. What is the EOQ?

b. Determine the price point that provides the lowest total annual cost and what is that cost?

Expert Answer

Solution :

A. EOQ = 379.471

B. Order Quantity – 800 at price 15.1 and total cost – 111170

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