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Company Case Study: Operation Management

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A company produces an item with D = 5000, H = $20, S = 500, and C=100. They have correctly figured their optimal order quantity Q = 500. The supplier has offered a $200 discount per order if the company orders 1000 at a time. What would be the total annual cost if the company accepts this offer and changes Q to 1000? (Be sure to figure the total annual discount correctly).

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Solution Summary

Discusses operation management.

Solution provided by:
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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