A manager has just received a revised price schedule from a vendor. What order quantity should the manager use in order to minimize total costs? Annual Demand is 120 units, ordering cost is $8, and annual carrying cost is $1 per unit.
Calculate the EOQ
What is the total cost at the EOQ?
Calculate the total cost for those quantity discounts which might be less than the EOQ, if any.
Comparing total cost, what is the order quantity which has the least total cost?
Quantity unit price
1-39 units $14
40-59 units $13
60-89 units $12
90 or more unites $ 11