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Rich Blue Chip's Price Structure QUANTITY PURCHASED PRICE/UNIT 1-99 units $350 100-199 units $325 200 or more units $300

Rich Blue Chip's Price Structure QUANTITY PURCHASED PRICE/UNIT 1-99 units $350 100-199 units $325 200 or more units $300

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Bell Computers purchases integrated chips at $350
per chip. The holding cost is $35 per unit per year, the ordering
cost is $120 per order, and sales are steady, at 400 per month. The
company's supplier, Rich Blue Chip Manufacturing, Inc., decides
to offer price concessions in order to attract larger orders. The
price structure is shown in the table.                                                                                                                                      a) What is the optimal order quantity and the minimum annual
cost for Bell Computers to order, purchase, and hold these
integrated chips?
b) Bell Computers wishes to use a 10% holding cost rather than
the fixed $35 holding cost in (a). What is the optimal order
quantity, and what is the optimal annual cost?
Rich Blue Chip's Price Structure QUANTITY PURCHASED PRICE/UNIT 1-99 units $350 100-199 units $325 200 or more units $300
Transcribed Image Text:Rich Blue Chip's Price Structure QUANTITY PURCHASED PRICE/UNIT 1-99 units $350 100-199 units $325 200 or more units $300
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