Problem:
The need of a company is 16000 units/year, demand is constant throughout the year, ordering cost is $25 per order, and the holding cost is 20% per unit. These suppliers below are offering discount. So which of the two suppliers should be selected to minimize total inventory cost, and what would be the inventory cost?
supplier A supplier B
Quantity Price Quantity Price
1-199 38.40 1-299 39.50
200-499 35.60 300-999 35.40
500 or more 34.70 1000 or more 34.60