Question
Keith Shoe Stores carries a basic black dress shoe for men that sells at an annual demand of 2000 pairs, Keith's current buying policy is
Keith Shoe Stores carries a basic black dress shoe for men that sells at an annual demand of 2000 pairs, Keith's current buying policy is to order 500 pairs each time an order is placed. An order costs Keith $30 to place. The annual carrying cost for each pair over a one year period is 20% of the price of a pair that Keith pays. At the order quantity of 500 pairs, Keith pays the lowest possible unit price of $28 per paid that the supplier could offer. Other quantity discounts offered by the supplier are given in the following table.
Order Quantity | Unit Price |
Up to 199 | $32 |
200 up to 299 | $30 |
300 and more | $28 |
Which order quantity do you recommend to Keith?
A. 200
B. 300
C. 146
D. 141
E. None of the above
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started