A firm currently purchases economic order quantity q of the

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A firm currently purchases the Economic Order Quantity (Q*) of a particular item from its supplier. The supplier is offering a 3% discount if the firm will buy in lots of 1,000 instead.

The firm expects to sell 5,000 units of the item per year. It's cost is $50 per unit and the cost to place an order is about $20 per order. The annual carrying costs are 30% of the inventory value.

Calculate the firm's net savings from taking the discount.
Enter your result rounded to the nearest integer. Do not include a dollar sign.

Net savings from taking the discount = Reduction in purchase price - TIC discount quantity + TIC optimal quantity.

Reference no: EM13477317

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