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Rocky Mountain Tire Center sells 22,000 go-cart tires per year. The ordering cost for each order...

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General Management

Rocky Mountain Tire Center sells 22,000 go-cart tires per year.The ordering cost for each order is $45, and the holding cost is20% of the purchase price of the tires per year. The purchase priceis $25 per tire if fewer than 500 tires are ordered, $20 per tireif 500 or more—but fewer than 1,000—tires are ordered, and $18 pertire if 1,000 or more tires are ordered.

a. How many tires should Rocky Mountain order each time itplaces an order?

b. What is the total cost of this policy?

Please show all work/steps

Answer & Explanation Solved by verified expert
4.3 Ratings (780 Votes)
Annual demandD 22000 tires Ordering cost S 45 Holding costH 20 of purchase price Order size Price per unit Holding cost20 of price per unit 0500 25 5 5001000 20 4 1000 or more 18 36 First find the minimum point for each price starting with the lowest price until    See Answer
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