Assignment:
The annual demand for a product is 9,000, and the unit price of the product is $5. The holding costs are estimated to be 10% of the price of the product, and the costs of placing a single order are $1,000.
(a) Calculate the optimal order quantity and the associated costs.
(b) The supplier now offers a discounted price of $4.80 if we order at least 8,000 units at a time. Should we take the offer? What are the associated costs?
(c) Our supplier adds another offer: a price of $4.75, if we purchase at least 18,000 units (so that we have to order only every other year). Should we take this offer?
Provide complete and step by step solution for the question and show calculations and use formulas.