1. A vendor's offers discounts to entice larger quantity purchases. The price breaks are as follows:
Order Size Discount Unit Price
0 - 40 0% $30
50 - 99 5% $28.50
100 or more 10% $27
If your store's annual demand is 150 units, ordering cost is $20, and annual inventory carrying cost is 25 percent of unit prices, what order quantity policy must you follow?
2. Items bought from a vender cost $20 each, and forecast for the next year's demand is 1,000 units. The cost of placing an order is estimated to be $5 every time order is placed. Storage costs are $4 per unit per year. What quantity must be ordered to reduce inventory related costs?
3. Ray's Satellite Emporium wishes to find out the best order size of their best selling satellite dish (model TS111). Ray has estimated the annual demand for this model at 1,000 units. His cost to carry one unit is $100 per year per unit, and he has estimated that each order costs $25 to place. Based upon the EOQ model, how many units must Ray order each time he places an order?