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Heizer and Render Chapter 12 Example 11: Wohl's Discount Store all-units quantity discounts
| Tool | Inventory Policy |
| Source | Heizer, J., and Render, B. (2011). Operations Management, 10th ed. Prentice Hall, Upper Saddle River, NJ. Chapter 12, Example 11. |
| Level | Undergraduate |
Problem
Wohl's Discount Store sells 5,000 toy race cars a year, ordering costs $49 and holding costs 20 % of the unit price. The supplier charges $5.00 each, $4.80 from 1,000 units and $4.75 from 2,000 units. What order quantity minimizes the total annual cost?
Inputs to Enter
- Model EOQ with all-units discounts (loads the example), period year: demand 5,000, order cost 49, holding rate 20 %
- Price schedule: 1, 5.00 / 1000, 4.80 / 2000, 4.75
Answers
- Q* at each price 700, 714, 718; the last two are infeasible and are raised to 1,000 and 2,000
- Total annual cost at 700: 25,000 + 350 + 350 = $25,700; at 1,000: 24,000 + 245 + 480 = $24,725; at 2,000: 23,750 + 122.5 + 950 = $24,822.50
- Order 1,000 at $4.80
Notes
Choose the quantity-discount model; the select fills the published inputs and price schedule.
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