Executive Office Supply Co. is offering all-unit discounts on the purchase of boxes of letter-size envelopes. If the order size is 0 to 1.299, the buyer receives no discount and each box costs $10.00. If the order size is 1,300 to 1,799, then the buyer receives a discount and each box costs $8.00. If the order size is 1,800 or above, the buyer receives a discount and each box costs $7.00. PK Worldwide Overnight Express is contemplating a large quantity purchase from Executive Office Supply Co. Her company has more than a thousand locations throughout the world and each location needs envelopes. PK estimates that her company's annual demand for envelopes is 10,000 boxes, the inventory holding costs are computed using a 20% annual interest rate, and the ordering costs are $150 per order. The following table includes EOQ calculations for this problem. (a) Complete the missing information indicated with the question mark (?) in the table. Page 1 of 4 EOQ1 EOQO 1225 TC(Q) TCIQ) | $ 82,204.49 TC2Q) | $ 72,081.99 $ 102,464.69 $ 82,190.89 $ 72,053.99 EOQ2 7 Break Point 1 1464 1300 $ 102,488.59 $ 102,453.85 $ 82,195.79 $ 82,193.85 $ 72,049.39 Break Point 2 1800 S 102.633.33 $ 82,273.33 $ 72,093.33 (b) Outline below how you would find the optimal ordering quantity for PK Worldwide Overnight Express in the minimum number of steps. Put each calculation operation in one step. Note that points will be deducted for any unnecessary steps in your algorithm. Step 1. Step 2. Step 3. Step 4. Step 5. Ac GO (c) What is the optimal ordering quantity? (d) Executive Office Supply Co. has changed the discount policy to an incremental-discounting scheme. i. Determine the average purchasing cost function (i.e., what we called PC(Q)/Q function for each range of ordering quantity) ii. As before, fill in the blanks in the table. T EOQIT EOQ2 | Break Point I Break Point 27 1225 1300 1800 TC.(Q) $ 102,449.49 $ 106,116.93 $ 108,246.10 $ 102,453.85 $ 102,633.33 TCQ) | $ 103,672.45 $ 90,117.23 | $ 102,438.26 $ 96.966.47 TC2Q) | $ 108,415.57 $ 81,723.14 | $ 106,326.62 $ 96.960.81 iii. As before, outline below how you would find the optimal ordering quantity for PK Worldwide Overnight Express in this case, in the minimum number of steps. Step 1. Step 2 Step 3. Step 4. Step 5. iv. What is the optimal ordering quantity in this case? Executive Office Supply Co. is offering all-unit discounts on the purchase of boxes of letter-size envelopes. If the order size is 0 to 1.299, the buyer receives no discount and each box costs $10.00. If the order size is 1,300 to 1,799, then the buyer receives a discount and each box costs $8.00. If the order size is 1,800 or above, the buyer receives a discount and each box costs $7.00. PK Worldwide Overnight Express is contemplating a large quantity purchase from Executive Office Supply Co. Her company has more than a thousand locations throughout the world and each location needs envelopes. PK estimates that her company's annual demand for envelopes is 10,000 boxes, the inventory holding costs are computed using a 20% annual interest rate, and the ordering costs are $150 per order. The following table includes EOQ calculations for this problem. (a) Complete the missing information indicated with the question mark (?) in the table. Page 1 of 4 EOQ1 EOQO 1225 TC(Q) TCIQ) | $ 82,204.49 TC2Q) | $ 72,081.99 $ 102,464.69 $ 82,190.89 $ 72,053.99 EOQ2 7 Break Point 1 1464 1300 $ 102,488.59 $ 102,453.85 $ 82,195.79 $ 82,193.85 $ 72,049.39 Break Point 2 1800 S 102.633.33 $ 82,273.33 $ 72,093.33 (b) Outline below how you would find the optimal ordering quantity for PK Worldwide Overnight Express in the minimum number of steps. Put each calculation operation in one step. Note that points will be deducted for any unnecessary steps in your algorithm. Step 1. Step 2. Step 3. Step 4. Step 5. Ac GO (c) What is the optimal ordering quantity? (d) Executive Office Supply Co. has changed the discount policy to an incremental-discounting scheme. i. Determine the average purchasing cost function (i.e., what we called PC(Q)/Q function for each range of ordering quantity) ii. As before, fill in the blanks in the table. T EOQIT EOQ2 | Break Point I Break Point 27 1225 1300 1800 TC.(Q) $ 102,449.49 $ 106,116.93 $ 108,246.10 $ 102,453.85 $ 102,633.33 TCQ) | $ 103,672.45 $ 90,117.23 | $ 102,438.26 $ 96.966.47 TC2Q) | $ 108,415.57 $ 81,723.14 | $ 106,326.62 $ 96.960.81 iii. As before, outline below how you would find the optimal ordering quantity for PK Worldwide Overnight Express in this case, in the minimum number of steps. Step 1. Step 2 Step 3. Step 4. Step 5. iv. What is the optimal ordering quantity in this case
