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Our college purchases sweatshirts from a vendor emblazoned with the college name and logo. The vendor...

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Operations Management

Our college purchases sweatshirts from a vendor emblazoned withthe college name and logo. The vendor sells the sweatshirts to thecollege for 45 SAR a piece. The cost to the college for placing anorder is 175 SAR and the carrying cost is 20% of the average annualinventory value. The college administration estimates that 2,000sweatshirts will be sold during the year. The vendor has offeredthe college the following volume discount schedule: QuantityDiscount (%) 1 – 299 0% 300 – 499 5% 500 – 799 8% 800+ 12% [5Marks] The college admin staff wants to determine the optimal orderquantity, given the foregoing quantity discount information.

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4.0 Ratings (726 Votes)
DEMAND 2000 ORDERING COST 175 HOLDING COST 20 EOQ SQRT2 DEMAND ORDERING COST HOLDING COST ANNUAL HOLDING COST ADJUSTED EOQ 2 HOLDING COST PER UNIT ANNUAL ORDERING COST ANNUAL DEMAND ADJUSTED EOQ    See Answer
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