Basis the information, Quantity and Price slabs are: 0 to 750 750 to 900 900 and

Question

Basis the information, Quantity and Price slabs are:

0 to 750

750 to 900

900 and above

The EOQ for 1st slab is 800

EOQ for 2nd slab is 875

EOQ for 3rd slab is 925

Now, the 1st slab value of EOQ is out of range, for 2nd slab the value is in range and also for 3rd slab. But the information is not complete about ordering cost, holding cost. The Optimal quantity in discount models is determined basis total cost which is the function of Holding cost + ordering cost + Product cost.

So, all these costs are important to find EOQ

Explanation / Answer

Exercise 11: In the calculation of an optimal policy for an all-units discount schedule, you first compute the EOQ values for each of the three order costs, and you obtain: QC0) 800, Q(1) 875, and Q(2) 925. The all-units discount schedule has breakpoints at 750 and 900. Based on this information only, can you determine what the optimal order quantity is? Explain your answer.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.