The Operator of a Concession at a Downtown Location Estimates

question 75

Essay

The operator of a concession at a downtown location estimates that he will sell 400 bags of circus peanuts during a year. Carrying costs are 17 percent of unit price, and ordering cost is $22. The price schedule for bags of peanuts is: 1 to 199, $1.00 each; 200 to 499, $.94 each; and 500 or more, $.87 each. What order size would be most economical?
D = 400 bags per year
S = $22
H = .17P

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Definitions:

Currency Strengthens

Occurs when the value of a currency rises in comparison to one or more foreign currencies, increasing purchasing power abroad.

Domestically-Produced Products

Goods that are manufactured or cultivated within a country's borders, as opposed to being imported.

Stock Selection Return

The return generated from choosing specific stocks to outperform the market or a segment of the market.

Benchmark

A standard or point of reference against which the performance of a security, investment portfolio, or asset manager can be measured.