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Question: PROBLEM 4 – QUANTITY DISCOUNT A manufacturing firm has been offered a component part it uses acco…

by | Nov 30, 2023 | Posted Questions



PROBLEM 4 – QUANTITY DISCOUNT

A manufacturing firm has been offered a component part it uses
according to the following discount pricing schedule provided by
the supplier:

QTY

PRICE/UNIT

1 – 199

$65

200 – 599

$59

600+

$56

The company uses 700 of the components annually. Annual carrying
cost is $14 per unit, and ordering cost is $275.

a)     Determine the amount the company
should order.

b)     If the supplier was willing to
negotiate, and the company preferred to take delivery of its annual
supply of the part in a single order, at what price per unit would
that become economical?

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