Should mike take advantage of the discount

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Reference no: EM133412201

Mike sells superior energy drinks online. his monthly demand for energy drinks was 10,000 bottles and anual holding cost was estimated at 20% of unit cost. the mail order company that he orders drinks from offered him a couple of possibilites - he couls pay $4.00 per bottle for orders of up to 10,000 bottles. Mike pays a fixed cost per order of $100.

a.) Assuming mike pays $4.00 per bottle, what is his optimal order quantity

b.)assuming mike pay $4.00 per bottlee, what is the total annual cost associated with your answer for part a?

c.) if mike orders at least 10,000 bottles, then after that threshold, he would pay only $3.98 per bottle. should mike take advantage of the discount? indicate how many bottles mike shouls order, and also the total annual cost for your pla.

Reference no: EM133412201

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