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    EOQUIZA

    Uploaded by

    Ram Pineda
    ABC Shoe store sells 500 pairs of men's black dress shoes every 3 months. It costs $30 to place each order. The annual holding cost rate is 75%. Based on the given discount categories and formulas, the optimal order quantity that minimizes total annual costs for ABC is the square root of 2 times the annual ordering costs divided by the annual holding costs, or approximately 300 pairs of shoes to qualify for the lowest unit cost and reduced total costs.

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    EOQUIZA

    Uploaded by

    Ram Pineda
    31 views1 page
    ABC Shoe store sells 500 pairs of men's black dress shoes every 3 months. It costs $30 to place each order. The annual holding cost rate is 75%. Based on the given discount categories and formulas, the optimal order quantity that minimizes total annual costs for ABC is the square root of 2 times the annual ordering costs divided by the annual holding costs, or approximately 300 pairs of shoes to qualify for the lowest unit cost and reduced total costs.

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    ABC Shoe store sells 500 pairs of men's black dress shoes every 3 months. It costs $30 to place each order. The annual holding cost rate is 75%. Based on the given discount categories and formulas, the optimal order quantity that minimizes total annual costs for ABC is the square root of 2 times the annual ordering costs divided by the annual holding costs, or approximately 300 pairs of shoes to qualify for the lowest unit cost and reduced total costs.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    31 views1 page

    EOQUIZA

    Uploaded by

    Ram Pineda
    ABC Shoe store sells 500 pairs of men's black dress shoes every 3 months. It costs $30 to place each order. The annual holding cost rate is 75%. Based on the given discount categories and formulas, the optimal order quantity that minimizes total annual costs for ABC is the square root of 2 times the annual ordering costs divided by the annual holding costs, or approximately 300 pairs of shoes to qualify for the lowest unit cost and reduced total costs.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
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    NAME: ________________________________

    1. ABC Shoe store carries a basic black dress shoe for men that sells at an
    approximate constant rate of 500 pairs of shoes every three months. It costs the
    company $30 to place an order. The annual holding cost rate is 75 percent. If the
    supplier gives a quantity discount, what order quantity would you recommend
    ABC Shoe store to take?
    Discount Category

    Unit Cost

    Order Size

    Unit Cost

    <75

    $30

    76 299

    $29.75

    >300

    $29.25

    Order
    Quantity

    Annual
    Holding
    Cost

    Annual
    Ordering
    Cost

    $30
    $29.75
    $29.25

    Order quantity that ABC Shoe store should adhere to:

    Q* = SQRT(2DCo/Ch) or Q* = SQRT(2DCo/IC)
    TC = (Q*Ch)/2 + (DCo)/Q* + DC

    Annual
    Purchase
    Cost

    Total Cost

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