GW4 - Quantity and Inventory
GW4 - Quantity and Inventory
GW4 - Quantity and Inventory
5.9/ The SBX Bookstore at The Ohio State University purchases from a vendor jackets
emblazoned with the Ohio State logo. The vendor sells the jackets to the store for $43 dollars per
jacket. The cost to the bookstore for placing an order is $150, and the annual carrying cost is 22
percent of the cost of a jacket. The bookstore manager estimates that 2,500 jackets will be sold
during the year. The vendor has offered the bookstore the following all unit volume discount
schedule:
Order Size Discount
1–299 0%
300–499 2
500–799 4
800+ 5
The purchasing manager wants to determine the bookstore’s optimal order quantity, given this
quantity discount information.
5.10/ Determine the optimal order quantity of jackets and total annual cost in exercise 5.9 if the
carrying cost is a constant $13 per jacket per year.
5.11/ The purchasing manager for Medco Research Laboratory orders letterhead forms and
stationery from an office products firm in boxes of 500 sheets. The company uses 5,000 boxes
per year. Annual carrying costs are $4.50 per box, and ordering costs are $34. The following all
unit discount price schedule is provided by the office supply company:
Order Quantity (boxes) Price per Box
200–999: $13
1,000–2,999: $12
3,000–4,999: $11
5,000+: $10
Determine the optimal order quantity and the total annual inventory cost.