The Owner of an Appliance Store Expects to Sell 500

question 16

Multiple Choice

The owner of an appliance store expects to sell 500 toasters this year.Each toaster costs her $6 dollars to purchase,and each time she orders a shipment of toasters,it costs $30.In addition,it costs $4 a year to store each toaster.Assuming the toasters sell out at a uniform rate and that the owner never allows herself to run out of toasters,how many toasters should be ordered in each shipment to minimize the annual cost? (Round any fractional amounts.)

• A)87
• B)22
• C)44
• D)33

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Definitions:

Lot Size

The quantity of units produced or purchased in a single production run or order to capture economies of scale or meet demand.

Volume-Based Discount

A pricing strategy where the price per unit of goods decreases as the quantity purchased increases, designed to encourage larger orders.

Pricing Schedule

A pricing schedule lists the prices for goods or services, often varying based on quantities purchased, contract length, or buyer types, to accommodate different purchasing scenarios.

Quantity Ordered

The total number of units of a product or service that a customer commits to buying at a specific time.