Question

A supplier for St. LeRoy Hospital has introduced quantity discounts to encourage larger order quantities of a special catheter. The price schedule is Order quantity Price per unit 0 to 299 $60.00 300 to 499 $58.80 500 more $57.00 The hospital estimates that its annual demand for this item is 936 units, its ordering cost is $45.00 per order, and its annual holding cost is 25 percent of the catheter’s unit price. What quantity of this catheter should the hospital order to minimize total costs?

          A supplier for St. LeRoy Hospital has introduced quantity discounts to encourage larger order quantities of a special catheter. The price schedule is
Order quantity
Price per unit
0 to 299
$60.00
300 to 499
$58.80
500 more
$57.00
The hospital estimates that its annual demand for this item is 936 units, its ordering cost is $45.00 per order, and its annual holding cost is 25 percent of the catheter’s unit price. What quantity of this catheter should the hospital order to minimize total costs?

Added by Melinda H.

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