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Management Studies

Q. Rocky Mountain Tire center sells 8,000 go-cart tires per year. Ordering cost for each order is $40 and holding cost is 30% of purchase price of tires per year. Purchase price is $22 per tire if fewer than 200 tires are ordered, $19 per tire if 200 or more, but fewer than 5,000 tires are ordered and $16 per tire if 5,000 or more tires are ordered.

a.) Explain how many tires should Rocky Mountain order each time it places an order?

b.) Assuming Rocky Mountain Tire Center orders (answer from above) tires per order, illustrate what is total annual cost?

c.) Total cost given an order quantity of 5,000 units at $13 = ?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M9310508

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