Question: A retail store dealing in computer hardware imports an enterprise model solid-state drive (SSD) at a fixed price of $1000 per unit from the sole
A retail store dealing in computer hardware imports an enterprise model solid-state drive (SSD) at a fixed price of $1000 per unit from the sole distributer of the SSD and would place orders at the EOQ. On January 1, 2020, the store received an offer of 15% discount on orders of 300 or more units. The estimated sales for the year are expected to be 600 units, the cost incurred per order is $1000 and the average holding cost per unit per annum is estimated to be $120 per unit. The full price is likely to remain $1000 during the year. Please ignore opening and closing inventories, safety stock etc
What was the EOQ before the discount offer?
What is the annual total cost paid by the store prior to the discount?
What is the minimum quantity of drives the retail store has to order to receive the discount?
What is the annual total cost paid by the store after the discount?
Should the retail store take the discount?
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