A.K. Plywood Products offers the following all-units quantity discount schedule

Question

A.K. Plywood Products offers the following all-units quantity discount schedule for its 4 by 8 foot sheets of quality plywood.





Order Size Price

1-9 sheets $25

10-49 sheets $23

50-99 sheets $21

100 sheets or more $18









Miami Home Furnishings (MHF) orders plywood from A.K. Plywood Products. MHF’s accounting department determines an ordering cost of $50 per order and an annual inventory holding cost percentage of 20% of the price of the item. The annual demand is 250 sheets. What should the order size be every time that an order is placed to minimize total annual cost?





250

10

50

100

77

Explanation / Answer

250

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