Nature’s Scents uses specially designed and labelled bottles to package its line of natural shampoos and body washes. The following information is available to assist managers determine how many bottles to order and when to order. 

Annual usage...................................................562.5 cases

Cost to place an order (K)..............................$15.00

Cost to carry one unit (H)...............................$  3.00

Daily usage........................................................5 cases

Lead time...........................................................5 days

Price per case................................................$30.00

The supplier has offered a quantity discount option.

Quantity.....................................................Price per Case

1–100 cases.....................................................$30.00

101–250 cases.................................................$28.50

251–1,000 cases..............................................$27.00

1,001 +cases....................................................$25.50

Required:

A. Calculate the economic order quantity for Nature’s Scents current level of production.

B. Evaluate the quantity discounts offered by the supplier.

C. Determine the re-order point.

D. Make a recommendation to Nature’s Scents management about the quantity to order and the re-order point. 

E. Would your recommendation change if the cost to carry a case of bottles in inventory increased to $45.00 per case? 

F. Would your recommendation change if the ordering cost decreased to $5.00 (keep the cost to carry inventory at $3.00)?