Input:

Annual Demand 4000 units/yr

Holding Cost 5 $/unit/yr
Odering Cost 100 $/order

Scenarios
Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5
Order Quantity 50 100 200 400 500
Average Inventory 25 50 100 200 250
Total Holding Cost 125 250 500 1000 1250
No. of Orders/yr 80 40 20 10 8
Total Ordering Cost 8000 4000 2000 1000 800
Total Cost 8125 4250 2500 2000 2050
Scenario 6 Scenario 7
1000 2000 9000
500 1000 8000
2500 5000 7000
4 2 6000
400 200 5000

Cost ($)
2900 5200
4000
3000
2000
1000
0
0 500 1000 1500 2
Order Quantity

Total Holding Cost Total Ordering Cost To

1000 1500 2000 2500
Order Quantity

Total Ordering Cost Total Cost

Annual Demand 4000 units/yr
Holding Cost 5 $/unit/yr
Odering Cost 100 $/order

Order Quantity 4000

Average Inventory 25
Total Holding Cost 125
No. of Orders/yr 1
Total Ordering Cost 100
Total Cost 225
Input:
Annual Demand 4000 units/yr
Holding Cost 5 $/unit/yr
Odering Cost 100 $/order

Order Quantity 400

Average Inventory 200
Total Holding Cost 1000
No. of Orders/yr 10
Total Ordering Cost 1000
Total Cost 2000
Input:
Annual Demand 4000 units/yr order
Holding Cost 5 $/unit/yr 9000
Odering Cost 100 $/order 8000
7000
Scenarios
6000
Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5
5000
Order Quantity 50 100 200 400 500
Average Inventory 25 50 100 200 4000 250
Total Holding Cost 125 250 500 1000 3000 1250
No. of Orders/yr 80 40 20 10 2000 8
Total Ordering Cost 8000 4000 2000 1000 1000 800
Total Cost 8125 4250 2500 2000 0 2050
0 500 1000

Total Holding Cost

 order quantity

Scenario 6 Scenario 7
1000 2000
500 1000
2500 5000
4 2
400 200
2900 5200
500 1000 1500 2000 2500

Total Holding Cost Total Ordering Cost Total Cost

Material Cost Ordering Cost
Material Cost 50 $/unit Ordering Cost 100

Discount Holding Cost

Less than 500 units 0% Discount on unit cost Less than 500 units 5
500 to 999 units 1% Discount on unit cost 500 to 999 units 6
1000 to 2000 units 2% Discount on unit cost 1000 to 2000 units 7

Chart Title
12000

10000

8000

6000

4000

2000

0
0 500 1000 1500 2000 2500 3000 3500
-2000

Total Holding Cost Total Ordering Cost

Annual Savings Total Cost
 Annual Demand
$/order Annual Demand 4000 Units/yr

$/unit/yr
$/unit/yr
$/unit/yr

Scenarios
Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6
Order Quantity 50 100 200 400 500 1000
Average Inventory 25 50 100 200 250 500
Total Holding Cost 125 250 500 1000 1500 3500
No. of Orders/yr 80 40 20 10 8 4
Total Ordering Cost 8000 4000 2000 1000 800 400
Material Unit Cost 50 50 50 50 49.5 49
Annual Savings 0 0 0 0 2000 4000
Total Cost 8125 4250 2500 2000 300 -100
Scenario 7 Scenario 8 Optimal
1500 3000 1000
750 1500 500
5250 10500 3500
2.666667 1.333333 4
266.6667 133.3333 400
49 49 49
4000 4000 4000
1516.667 6633.333 -100