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A local supermarket offers a lunch meal deal, which is very popular with local workers. Each year the supermarket sells 7200 bottles of orange juice as part of the meal deal. The bottles of juice are purchased from a supplier and stored until needed. The cost of placing an order with the supplier is £5.50. The cost of storage is £1.15 per bottle of juice per year. 

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Calculate the economic order quantity rounded to the nearest whole number.

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The catering company that supplies the bottles of juice offers a discount for larger orders.

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Use the supplier price list (shown below) to determine if it is better for the café to use the EOQ or to use a larger quantity and get a discount on the price.

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  Supplier price schedule

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
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Order size

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Cost per bottle of Orange Juice

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100 - 500

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£0.35

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501 - 1000

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£0.32

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  1. Calculate the total cost (at EOQ) =[[0]] to 2 decimal places.
  2. \n
  3. Calculate the total cost (at 501)=[[1]]  to 2 decimal places.
  4. \n
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Is it cheaper to buy EOQ or larger quantity?

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