Question
Engineering students are preparing for current years student festivities, and they are wondering what lot sizes they should use for buying customized, big, decorative balloons.
Engineering students are preparing for current years student festivities, and they are wondering what lot sizes they should use for buying customized, big, decorative balloons. They have the following information:
They need 100 balloons per month, ordering cost is $30 per order, and cost of carrying the balloon inventory is 10% of purchase price on annual level.
a) Calculate the EOQ when the price per balloon is $10,00
b) Balloon company offers them a discount of 2% from the balloon price, if they order minimum 350 balloons. Calculate the minimum total cost with the discount.
c) Should they utilize the discount?
Tip: don't forget the purchase costs!
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