Climat Co has been buying a chemical water conditioner for its bait (to help keep its baitfish alive) in an optimal fashion using EOQ analysis. The supplier has now offered ZZZ a discount based on the quantity purchased (prices and quantity ranges can be found in the table below). Current data for the problem are: D = 200 units per year; S = $20.00, I = 20% per year.
(a) What is the optimal order quantity?
(b) What are the annual total cost, including product cost, of continuing their current behavior?
Range 1
Range 2
Range 3
Quantity
1 – 59
60 – 179
≥ 180
Unit Price, P
$5.00
$4.75
$4.50
Expert
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