The chains are purchased from an outside supplier

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Reference no: EM131766573

A manufacturer produces bicycles. The chains are purchased from an outside supplier. Four hundred chains per week are required. Chains cost $12 each. The total cost associated with an order is $60, while the storage cost is 10% of the price of each chain. Assume the manufacturer works 50 weeks per year. In an attempt to reduce its costs, the chain manufacturer has offered to discount the of chains by 1 ½% on orders of 2500 or more. Should the discount be taken?

Reference no: EM131766573

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