What is the optimal order size


A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8 per stone for quantities of 600 stones or more, $9 per stone for orders of 400 to 599 stones, and $10 per stone for lesser quantities. The jewelry firm operates 200 days per year. Usage rate is 25 stones per day, and ordering costs are $48. If annual carrying costs are 30 percent of unit cost, what is the optimal order size?

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Operation Management: What is the optimal order size
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