Homework 3

Enrique Rubi Moreira

ID: 3352781
6/8/2022

Objective
Try to understand what has been in class and apply it to solve the exercise in the presentation

A company has a chance to reduce their inventory ordering costs by placing larger quantity orders using the price-break
What should their optimal order quantity be if this company purchases this single inventory item with an e-mail ordering
2% of the inventory cost of the item, and an annual demand of 10,000 units?

D= 10,000 units
i= 2%
Co= $ 4

Order Quantity (units) Unit Price

0-2,499 $ 1.20
2500-3999 $ 1.00
4000-more $ 0.98

Maintainan
Q* TC
ce cost
1,826 $12,043.82
2,000 $10,024.10
2,020 #VALUE!

Conclution
The optimal quantity to choose is 1,826 units because the cost of these is lower than that of the other quantities. It can
would be "better" to order 4,000 units or more, however, adding the acquisition costs to the price will increase it, whic
instead of 4,000 or more.
 orders using the price-break order quantity schedule below.
y item with an e-mail ordering cost of $4, a carrying cost rate of
demand of 10,000 units?

of the other quantities. It can be seen in the first table that it

the price will increase it, which leads us to order 1,826 units