Class Assignment Solution 4 (Inventory Management- DD)

Q1) Dell Computers purchases integrated chips at 350 per chip. The holding cost is 35 per unit per year, the ordering cost is 120 per order, and sales are steady, at 400 per month. The companys supplier, Rich Blue Chip Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below.

a) What is the optimal order quantity and the minimum annual cost for Bell Computers to order, purchase, and hold these integrated chips?

T b) Bell Computers wishes to use a 10% holding cost rather than the fixed 35 holding cost in (a). What is the optimal order quantity, and what is the optimal annual cost Solution YI However, if Bell...