A tire dealer buys 4000 tires a year from a local distributor. Each tire costs $75, the ordering fee is $30 per shipment and the storage cost is $24 per tire per year. How many tires should be ordered in each shipment in order to minimize the total cost?

A tire dealer buys 4000 tires a year from a local distributor. Each tire costs $75, the ordering fee is $30 per shipment and the storage cost is $24 per tire per year. How many tires should be ordered in each shipment in order to minimize the total cost?

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter5: Buying The Necessities

Section: Chapter Questions

Problem 20AA

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Question

7. A tire dealer buys 4000 tires a year from a local distributor. Each tire costs
$75, the ordering fee is $30 per shipment and the storage cost is $24 per tire
per year. How many tires should be ordered in each shipment in order to
minimize the total cost?

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