Minimizing Cost: Order Size for Optimal Price

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In summary, the minimum cost of ordering and transporting components for manufacturing a product can be calculated using the formula $C=100\left(\frac{200}{x^2}+\frac{x}{x+30}\right)$, where $C$ is measured in thousands of dollars and $x$ is the order size in hundreds. To find the order size that minimizes the cost, one can take the derivative and set it to zero, or use a graphing utility to find the root of the equation. The minimum order size is approximately 4045 units.
  • #1
karush
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Minimum Cost The ordering and transportation cost $C$ of the components used in manufacturing a product is

$C=100\left(\frac{200}{x^2}+\frac{x}{x+30}\right),\ x\ge1$

Where $C$ is measured in thousands of dollars and $x$ is the order size in hundreds.
Find the order size that minimizes the cost. [Hint: use the roots feature of a graphing utility]

I took the derivative of this and set it to zero but did not get the ans of $4045$ units

from the graph it looks like the min would be 40.45 then times 100 would be the ans

thanks ahead
 
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  • #2
Re: minumum cost

Differentiating and equating to zero results in:

$\displaystyle 3x^3-40x^2-2400x-36000=0$

Using a numeric root-finding technique such as Newton's method yields the real root at:

$\displaystyle x\approx40.45$

Since x represents hundred of units, the answer is then 4045 units.
 
  • #3
Re: minumum cost

OK on the TI-Nspire Cas it was

zeros$\left(3x^3-40x^2-2400x-36000\right)\approx\ 40.45$
 

FAQ: Minimizing Cost: Order Size for Optimal Price

What is "Minimizing Cost: Order Size for Optimal Price"?

"Minimizing Cost: Order Size for Optimal Price" is a concept in economics that refers to finding the ideal quantity of a product to order in order to minimize the total cost of production and maximize profits.

Why is it important to minimize costs in production?

Minimizing costs in production is important because it directly affects a company's profits. By finding the optimal order size, a company can reduce their production costs and increase their profits. It also allows for more efficient use of resources and can make the product more affordable for consumers.

How is the optimal order size determined?

The optimal order size is determined by analyzing the relationship between the cost of production and the quantity of a product ordered. This is typically done through mathematical models and cost analysis techniques to find the quantity that results in the lowest total cost.

What factors influence the optimal order size?

The optimal order size can be influenced by various factors such as production costs, demand for the product, storage and transportation costs, and the cost of raw materials. These factors can vary depending on the industry and the specific product being produced.

How often should a company re-evaluate their optimal order size?

It is recommended for a company to regularly review and re-evaluate their optimal order size, as market conditions and production costs may change over time. This can ensure that the company is always producing at the most cost-effective level and maximizing their profits.

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