Total cost of this price break inventory

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Reference no: EM132730153

The demand for a particular part called SKU 005 is 1,200 units a year. The cost of one SKU 005 is $40.00. It costs $40.00 to place an order SKU 005, and the user of SKU 005 has a per year inventory carrying cost of 25% of unit cost. Assume that there are 250 working days in the year where SKU 005 is used. The typical order placed is the EOQ.

Good news! The vendor who sells SKU 005 has just offered a 5% discount for orders of 500 or more.

What is the Total Cost of this PRICE BREAK inventory offer (that is, the 5% discount)?

Reference no: EM132730153

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