Suppose that a company buys about $81,000 worth of items from a vendor each year. If ordering
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Question:
Suppose that a company buys about $81,000 worth of items from a vendor each year. If ordering cost is $25 per order and holding cost rate is 20%
The vendor will offer you a 2% discount if you buy at least $9,000 of items in each order. Should you accept this offer? If no, what is a fair counter offer?
Annual demand = 81,000 items
Purchasing (ordering) costs = $25 per order
Annual hold cost = 25%
Cost of each item = $1
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