Answer:
812.40 units
Explanation:
Given that,
Annual holding cost percentage = 20%
Ordering cost = $110 per order
Annual demand = 15,000 units
Units Ordered - Price Per Unit
1-250 - $30.00
251-500 - $28.00
501-750 - $26.00
751 and up - $25.00
Optimal order quantity:
= [tex]\sqrt{\frac{2\times Annual\ demand\times Cost\ per\ order}{Holding\ cost} }[/tex]
= [tex]\sqrt{\frac{2\times 15,000\times 110}{25\times0.2} }[/tex]
= [tex]\sqrt{\frac{3,300,000}{5} }[/tex]
= 812.40
Therefore, the optimal order quantity is 812.40 units.
