A manager just received a new price list for boxes from a supplier. It will now cost$1.10 a box for order quantities of 801 or more ,$1.10 a box f0r 200 to 800 ,and $1.20 a box for smaller quantities ordering cost is $40 percent of unit cost per year. The company uses 3,6000 boxes a year the manager has suggested a round number orer quantity of 800 boxes the manager rationale is that total inventory cost is U shaped and fairly flat at its minimum. Therefore the difference in total cost between 800 and 801 units would be small anyway. How would you reply to the managers suggestion? What order quantity woud you recommend?
New price list for boxes
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