Exhibit 12-2A Moving Company Purchases Large Cardboard Shipping Boxes from a Supplier

question 8

Essay

Exhibit 12-2A moving company purchases large cardboard shipping boxes from a supplier. The company uses approximately 10,000 of these boxes for packing customers' belongings each year, and demand for the boxes is essentially constant throughout the year. The box supplier offers the following pricing schedule, based on the quantity of boxes ordered:The fixed cost of placing an order is $50, and the company's cost of capital is 7% per year.
$$\begin{array} { l r r r r } \text { Unit purchase cost } & \$ 5.00 & \$ 4.50 & \$ 4.00 & \$ 3.50 \\\text { Order is more than } & 0 & 251 & 501 & 751 \\\text { Order is less than } & 250 & 500 & 750 & 1000\end{array}$$
-Refer to Exhibit 12-2. Assuming there are no storage costs, formulate a Solver model and find the optimal order quantity.

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