Jan Kottas is the owner of a small company that buys and resells electric knives used to cut fabric. The annual demand
Posted: Mon Jun 06, 2022 6:45 am
Jan Kottas is the owner of a small company that buys and resells
electric knives used to cut fabric. The annual demand is for
8,000 knives, and Jan is currently buying from Knives-R-Us.
The ordering cost is $100 per order. The carrying (holding)
cost per unit per year is 4% of the acquisition cost of the knife,
which is $20.00.
Jan has been approached by Knives-R-Us about buying knives under
a new pricing schedule. One option is to order the knives in
quantities between 1400 and 1599. If she does this,
Knives-R-Us will lower the acquisition price to $19.75 each.
If she buys 1600 or more at a time, the company will lower the
price to $19.50. Of course, for all other quantities she can
still buy the knives at $20.00 per knife.
If your order quantities are in fraction of units, leave
them that way.
Provide the lowest total cost for each of the three price
options: $19.50, $19.75, and $20.00. Include the
holding, ordering and acquisition cost.
electric knives used to cut fabric. The annual demand is for
8,000 knives, and Jan is currently buying from Knives-R-Us.
The ordering cost is $100 per order. The carrying (holding)
cost per unit per year is 4% of the acquisition cost of the knife,
which is $20.00.
Jan has been approached by Knives-R-Us about buying knives under
a new pricing schedule. One option is to order the knives in
quantities between 1400 and 1599. If she does this,
Knives-R-Us will lower the acquisition price to $19.75 each.
If she buys 1600 or more at a time, the company will lower the
price to $19.50. Of course, for all other quantities she can
still buy the knives at $20.00 per knife.
If your order quantities are in fraction of units, leave
them that way.
Provide the lowest total cost for each of the three price
options: $19.50, $19.75, and $20.00. Include the
holding, ordering and acquisition cost.