We use 1,000 electric drills per year in our production process. The ordering cost for these is $100 per order and the carrying cost is assumed to be 40% of the per-unit cost. Price is established by the following quantity discount schedule. The company works 250 days per year.
1 to 119
120 and up
$78 per unit
$50 per unit
The size of the optimal order is:
How many orders do we need to place per year?:
How many days do we have to wait between orders? What is the maximum inventory?:
What is the average inventory?
The Holding Cost for the optimal order is:
The Ordering Cost for the optimal order is:
The Total Cost of Inventory (TCI) is: