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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The Answer of 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

The Operator of a Concession at a Downtown Location Estimates