Should we take advantage of the quantity discount

Assignment Help Operation Management

Reference no: EM131797200

The annual demand for an item is 40,000 units. The ordering cost is $40 and the carrying cost is assumed to be 20% of the price. What is the optimal order quantity, given the following price schedule for purchasing the item? Should we take advantage of the quantity discount? Quantity Price 1-1,499 $2.50 per unit 1,500 - 4,999 $2.30 per unit 5,000 or more $2.00 per unit.

Reference no: EM131797200

Questions Cloud

Established to cater for the rising demand : Air Conditioning was established to cater for the rising demand for electronics and home appliances by consumers in Saudi Arabia.

Calculate the total inventory cost : With the EOQ model, calculate the total inventory cost TC(Q), given that annual demand D = 8000 units per year,

What is the free cash flow for the firm : Given ABC's next year EBIT of $945,000 and depreciation of $105,000, its capital expenditure will be $210,000. What is the free cash flow for the firm (FCFF)?

What is the present value of growth opportunities : ABC has come out with a new and improved product. As a result, the firm projects an ROE of 20%, and it will maintain a plowback ratio of .60.

Should we take advantage of the quantity discount : Should we take advantage of the quantity discount?

Using the same exponential smoothing forecasting approach : What would their forecast for Friday using the same exponential smoothing forecasting approach?

What will be the dividend per share in the coming year : ABC has an ROE of 20% and a plowback ratio of 80% (i.e., earnings retention ratio b = .6). The coming year's earnings are expected to be $3.5 per share.

Companies increasingly introducing green products : Why are companies increasingly introducing green products and engaging in ecologically friendly practices? Be thorough in your answer.

Critique so-called multi-step flow of communication model : Thoroughly discuss, describe and critique the so-called “Multi-Step Flow of Communication Model.”

User Account

All Pages