Quantity should be placed with no discount

Example with discount: EOQ 1,000

• Clarke’s Photography Store sells 12,000 rolls of film Quantity (units) Price/U acquistion cost Carrying cost Purchase price Total Cost
per year. The wholesale price is $3 per roll. The cost 500 $ 3.00 $ 300.00 $ 75.00 $ 36,000.00 $ 36,375.00
of processing each order to be placed with the 1000 $ 2.98 $ 150.00 $ 150.00 $ 35,760.00 $ 36,060.00
1500 $ 2.96 $ 100.00 $ 225.00 $ 35,520.00 $ 35,845.00
wholesales is $12.5 and carrying costs are 30 cents
2500 $ 2.94 $ 60.00 $ 375.00 $ 35,280.00 $ 35,715.00
per roll per year. 5000 $ 2.92 $ 30.00 $ 750.00 $ 35,040.00 $ 35,820.00
• What is the economic order quantity and the optimal
time period between orders? 4.8
Quantity Price per roll
1 – 500 $3.00
501 – 1499 $ 2.98
1500 – 2499 $ 2.96
2500 – 4999 $ 2.94
5000 and over $2.92

23 - 27
Copyright 2002 McGraw-Hill Australia Pty Ltd.
Copyright ã 2011 McGraw-Hill Australia Pty Ltd
PPTs t/a Business Finance 11e by Peirson 21-27

PPT t/a Business Finance 8e by Peirson et al.

aD cQ
TC = + Q* = 2aD c
Q 2
D 12,000
a $ 12.50
c $ 0.30
p $ 3.00