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Assume that a company considering what order to place at a demand rate of 1200 items per year. The fixed cost of placing an order is $10, and holding costs are based on a 15 percent annual interest rate. For orders of less than 400 items, the company charges $2 per item; for orders of 400 or more but fewer than 800 items, it charges $1.8 per item; and for orders of 800 or more, it charges $1.6 per item. What should be the size of the order?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92527173

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