Input Data
Retailer
Annual Demand 120,000
Order cost per lot 100 €
Unit cost 10 €
Holding cost 20%
AZOR
Order cost per lot 1,600 €
Unit cost 5 €
Holding cost 25%
Retailer Orders Independently Orders Optimize Joint Costs
Economic Quantity Ordered by Retailer 3464 Quantity that minimizes total cost 11204
Retailer ordering cost € 3,464 Retailer ordering cost € 1,071
Retailer holding cost € 3,464 Retailer holding cost € 11,204
Retailer total cost € 6,928 Retailer total cost € 12,275
AZOR delivery cost € 55,426 AZOR delivery cost € 17,136
AZOR holding cost € 2,165 AZOR holding cost € 7,003
AZOR total cost € 57,591 AZOR total cost € 24,139
Total cost across both parties € 64,519 Total cost across both parties € 36,414
€ 28,105
Lot size break point 11204
Unit cost below break point € 10
Discount per unit at breakpoint € 0.0441
Discounted price at breakpoint € 9.9559
Retailer Orders EOQ
EOQ for retailer 3464
Order cost at EOQ € 3,464
Holding cost at EOQ € 3,464
Material cost at EOQ € 1,200,000
Total cost at EOQ € 1,206,928
Retailer Orders Breakpoint
Order quantity 11204
Order cost for retailer € 1,071
Holding cost for retailer € 11,155
Material cost for retailer € 1,194,702
Total cost for retailer € 1,206,928