Question
Bostick Company is a distributor of air filters to retail stores. It buys its filters from several manufacturers. Filters are ordered in lot sizes of
Bostick Company is a distributor of air filters to retail stores. It buys its filters from several manufacturers. Filters are ordered in lot sizes of 1,000, and each order costs 4,000 to place. Demand from retails stores is 20,000 filters per month, and carrying costs is 10 a filter per month. What is the optimal order quantity with respect to so many lot sizes? What would be the optimal order quantity if the carrying cost were cut in half to 5 a filter per month? What would be the optimal order quantity if ordering costs were reduced to 1,500 per order?
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