A jewelry firm buys semiprecious stones to make bracelets andrings. The supplier quotes a price of $8.20 per stone forquantities of 600 stones or more, $8.70 per stone for orders of 400to 599 stones, and $10 per stone for lesser quantities. The jewelryfirm operates 214 days per year. Usage rate is 25 stones per day,and ordering costs are $48.
| a. | If carrying costs are $2 per year for each stone, find the orderquantity that will minimize total annual cost. (Round yourintermediate calculations and final answer to the nearest wholenumber.) |
| b. | If annual carrying costs are 27 percent of unit cost, what isthe optimal order size? (Round your intermediatecalculations and final answer to the nearest wholenumber.) |
| c. | If lead time is 5 working days, at what point should the companyreorder? |
