Refer to the information provided for Roybow Corporation in Problem 15-19. Suppose that Roybow's supplier decides to offer a 2 percent cash discount if products are ordered in increments of 1.000. How many mowers should Roybow order each time an order is placed to minimize total inventory costs?
Problem 15-19
Roybow Corporation sells lawn mowers that cost $160 each to purchase and prepare for sale. Annual sales are 5,000 mowers, carrying costs are 20 percent of inventory costs, and Roybow incurs a cost of $32 each time an order is placed.
(a) What is the EOQ for the mowers?
(b) What will be the total inventory costs if the EOQ amount is ordered?