The annual demand for an item is 10,000 units.The cost to process an order is $75 and the annual inventory holding cost is 20% of item cost.(a)What is the optimal order quantity,given the following price breaks for purchasing the item? (b)What price should the firm pay per unit? (c)What is the total annual cost at the optimal behavior?
Definitions:
Normal Return
The minimum profit necessary to keep a company in business, equating to the opportunity cost of capital.
Own Capital
The funds or assets personally invested by the owners into a business, distinct from borrowed capital.
Economic Profit
The separation between full-scale income and aggregated expenses, acknowledging both straightforward and underlying costs.
Own Capital
The personal wealth or assets invested in a business by its owners.
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