Problem:
A local nursery, Greens, uses 1560 bags of plant food annually. It costs $10 to place an order for plant food. In an effort to reduce its inventory Rapid Grower, the supplier of plant food for Green, is offering Greens two additional price breaks to consider. If the nursery orders a three-month supply, the cost per bag s $16. If Greens orders a six-month supply, the cost per bag is $14.50. Greens estimates its holding cost to be 25 percent of the unit price. Determine the most cost-effective ordering policy for Greens
It is cheapest to order a 3-month supply
It is cheapest to order a 6-month supply.