A.K. Plywood Products offers the following all-units quantity discount schedule for its 4 feet by 8 feet
Question:
A.K. Plywood Products offers the following all-units quantity discount schedule for its 4 feet by 8 feet sheets of quality plywood.
Order SizePrice
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?
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Computation of the following Annual demand 250 sheets Order Size Price Ordering cost 50 per order 19 ...View the full answer
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