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Company X can purchase a certain component from either Supplier A or Supplier B. Supplier A offers an incremental quantity discount and charges $20 per unit for the first 2,000 units in an order, $18 per unit for the next 2,000 units in the order, and $14 per unit for any unit beyond in an order. Supplier B offers an all-unit quantity discount and charges $20 per unit for orders of no more than 3,000 units and $16 per unit for any bigger orders.

 

  1. Suppose Company X decides to buy 8,000 units from Supplier A. What is the average unit cost of the order? Please provide at least one step of calculation and the correct answer for full credit.
  2. If Company X wants to place an order of 8,000 units, which supplier offers a lower total cost. Provide the reason for full credit.

 

Reference no: EM132372531

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