Problema large medical clinic uses 500 cases of floor, Ask an Expert

Management Studies

Problem:

A large medical clinic uses 500 cases of floor polish per year. Purchases are made at an ordering cost of $15 per order. Inventory carrying cost is 20% per year. The price schedule, which includes the transportation cost, shows that orders of less than 50 cases will cost $49.95 per case; between 50-79 cases will cost $44.95 per case; and 80+ cases will cost $39.95 per case. Prices apply inclusively to all units bought.

Required:

Question 1) What is the optimum purchase order size that should be placed, and what is the total cost? Solve the given numerical problem and illustrate step by step calculation.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91169145

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