Consider the EOQ model with all-unit cost discounts determined by the following:
Order Size /// Price per Item
Q < b /// $38.50
Q ≥ b /// $32.25
for some constant price break point b.
The annual holding cost is 6.71% of the purchasing cost. There is an overhead cost of $9 for each order placed, and the annual demand is 50 items.
(a) If b = 60, determine the optimal order quantity.
(b) If b = 40, determine the optimal order quantity.
(c) Determine the value of b such that there are two optimal order quantities. For this value of b, determine the two optimal order quantities.