Question
Ivonne Callen sells beauty supplies. Her annual demand for a particular skin lotion is 1,000 units. The cost of placing an order is $100, while
Ivonne Callen sells beauty supplies. Her annual demand for a particular skin lotion is 1,000 units. The cost of placing an order is $100, while the holding cost per unit per year is 20% of the cost. This item currently cost $50 if the order quantity is less than 100. For orders between 100 and 399 units, the unit cost falls to $49. For orders of 400 units or more, the unit cost falls to $48. To minimize total Inventory cost:
(1) How many units should Ivonne order each time she places an order?
(2) What is the minimum annual total cost? Show work.
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