Golden Valley Cannery uses 64,000 size 7X cans annually and can purchase any quantity up to 10,000 cans at $.040 per can. At 10,000 cans the unit cost drops to $.032 per can, and for purchases of 30,000 it is $.030 per can. The costs of ordering are $24 per order, and interest costs are 20 percent of the price per can and apply to the average inventory. Storage costs are $.02 per can-year and are based upon maximum inventory. (Disregard safety stock costs)
What is the EOQ, disregarding the quantity discounts?
What is the most economical order quantity, considering the quantity discounts?