EOQ Model and Quantity Discount

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• Readily Attainable EOQ Assumptions

  Here, the EOQ assumes that quantity discount available for the various levels of the quantity ordered are known.

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  The quantity with the TAC is the optimal quantity to be ordered. This posting contains solution to following inventory problem on quantity discount model.

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  What is the optimal order quantity of hamburger rolls for this restaurant? b. What questionable assumptions are being made by the EOQ model? 4.

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• Calculate Quantity Discount for Inventory and EOQ

  Find EOQ and the total cost at EOQ. Please see attached file for complete details on your posting. Excel file contains calculations of Quantity Discount for Inventory and EOQ.

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  How is the EOQ figured when quantity discounts are applied? If a company sells 2000 units a year, what is the EOQ in terms of dollars and units if order costs are $60/order and $1 per year per unit for storage?

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  Total Cost Remarks 2000 0.85 30600 450 450 31500 EOQ quantity 6000 0.82 29520 150 1350 31020 Quantity at which discount is offered Total annual cost if discount is taken is less than the total annual cost for EOQ quantity