A company sells greeting cards. The anticipated demand for greeting cards is 200 each year. The cost of placing an order for is $12. The holding cost is $23 per card per year. (Shortages not allowed.) When the company places an order, it must pay $1.77 for each of the first 15 cards it orders. If the company places an order for more than 15 cards, it still has to pay $1.77 per card for the first 15, but then it pays $1.25 for each card after that. Assume that the EOQ Model assumptions hold. Additionally, the same quantity Q is ordered each time an order is placed.
(a) Determine the optimal order quantity.
(b) Determine the minimum total annual cost.
Item 1 /// Item 2 //// Item 3
λj ::: 1800 /// 1130 //// 820
cj ::: 55 //// 340 //// 90
Kj ::: 110 //// 145 //// 55
hj ::: 10.8104 //// 102.3472 //// 12.5000