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The average demand is 21000 per year. Transportation cost is $65 per order. Supplier is willing to charge $500 per order and purchase price of $43 per product. Holding cost per item is $8.6.
Calculate the optimal order quantities.
Please do not simply type out test questions and expect to provide you with an answer. You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about – then I will explain.
I am surprised that you have to ask this anyway, since the answer is arrived at by simply using the formula that is provided on the formula sheet.
D = 21,000; Co = 565; Ch = 8.6. Put then in the formula and you have the answer!!
This is all explained in my free lectures. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.