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

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Operations Management

Our collegepurchases sweatshirts from a vendor emblazoned with the collegename and logo. The vendor sells the sweatshirts to the college for45 SAR a piece. The cost to the college for placing an order is 175SAR and the carrying cost is 20% of the average annual inventoryvalue. The college administration estimates that 2,000 sweatshirtswill be sold during the year. The vendor has offered the collegethe following volume discount schedule:

Quantity

Discount(%)

1 –299

0%

300 –499

5%

500 –799

8%

800+

12%

The college admin staff wants to determine the optimal orderquantity, given the foregoing quantity discount information.

Answer & Explanation Solved by verified expert
4.1 Ratings (800 Votes)
Annual Demand D 2000Ordering cost S 175Holding cost I 20 average inventory costDiscounted price for quantity volumes    See Answer
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