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    Inventory management with quantity discounts

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    Mr. David Mueller is a reseller of sports shoes. The supplier of shoes offers discounts depending on quantity ordered. Following are the discount slabs:
    Order quantity Cost per shoe pair ($)
    1-799 4.40
    800-1199 4.00
    1200+ 3.60

    Mr. David needs to decide how many shoe pairs should be ordered to keep total cost minimum. He has developed following estimates.
    Annual demand (D) = 25,000 pairs
    Ordering cost (S) = $12.00
    Carrying cost % per annum (I) = 15%

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    Solution Preview

    Inventory Management with Quantity Discounts
    Mr. David Mueller is a reseller of sports shoes. The supplier of shoes offers discounts depending on quantity ordered. Following are the discount slabs
    Order quantity Cost per shoe pair ($)
    1-799 4.40
    800-1199 4.00
    1200+ 3.60

    Mr. David needs to decide how many shoe pairs should ...

    Solution Summary

    The solution provides step by step directions including formulas to determine how many shoe pairs should be ordered.

    $2.19