4.

Costs	As Is Ordering	Bulk Discount Ordering
Unit Cost	$30.00	$28.00
Unit Transport Cost	$0.20	$0.20
Inventory Carrying Cost (percent)	20%	20%
Ordering Cost	$200.00	$200.00
Annual Demand	200,000	200,000
Ordering Quantity	20,000	40,000

Using the above information, we can calculate the different costs for each option.

	As Is Ordering	Bulk Discount Ordering
Holding Cost	(0.5 * Ordering Quantity) * Unit Cost * Inventory Carrying Cost	(0.5 * Ordering Quantity) * Unit Cost * Inventory Carrying Cost
Ordering Cost	(Annual Demand/Order Quantity)*Ordering Cost	(Annual Demand/Order Quantity)*Ordering Cost
Transport Cost	Transport Cost * Annual Demand	Transport Cost * Annual Demand
Cost of Goods	Unit Cost * Annual Demand	Unit Cost * Annual Demand
Total Landed Cost	Hold Cost + Ordering Cost + Transport Cost + Cost of Goods	Hold Cost + Ordering Cost + Transport Cost + Cost of Goods

Which is cheaper As Is Ordering or Bulk Discount Ordering? By how much?