Question

Consider the all-units quantity discount schedule below. Which of the following sets of order quantities is guaranteed to contain the optimal solution (i.e., best order quantity)?

a) (3849, 4082)
b) (2000, 2500)
c) (5000, 6000)
d) (10000, 12000)

Answer 1

The set of order quantities guaranteed to contain the optimal solution is (5000, 6000). Therefore, the correct option is c) (5000, 6000).

Step-by-step explanation:

The optimal order quantity lies within the range of discounts, aiming to minimize costs while maximizing benefits. In this scenario, the set (5000, 6000) aligns with the quantity discount schedule and offers a range where the optimal solution is more likely to be found. The selection of an order quantity involves balancing inventory costs against the cost savings from discounts.

Order quantities outside the specified ranges might not capitalize on the offered discounts, leading to increased costs or missed savings opportunities. The (5000, 6000) set, falling within the discount schedule, provides flexibility for potential cost reductions due to quantity-based discounts without exceeding the maximum threshold.

This range signifies the consideration of economic order quantity principles, ensuring cost-efficiency while accommodating demand variations. Therefore, in this scenario, (5000, 6000) offers the best chance of obtaining the optimal order quantity in line with the discount structure provided. Therefore, the correct option is c) (5000, 6000).