Anna Smith sells beauty supplies. Her annual demand for a particular skin lotion is 1,000 units. The cost of placing an order is $20, while the holding cost per unit per year is 10 percent of the cost. This item currently costs $10 if the order quantity is less than 300. For orders of 300 units or more, the cost falls to $9.80. To minimize total cost, how many units should Ivonne order each time she places an order? What is the minimum total cost?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Anna Smith sells beauty supplies. Her annual demand for a particular skin lotion is 1,000 units. The cost of placing an order is $20, while the holding cost per unit per year is 10 percent of the cost. This item currently costs $10 if the order quantity is less than 300. For orders of 300 units or more, the cost falls to $9.80. To minimize total cost, how many units should Ivonne order each time she places an order? What is the minimum total cost?

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