BZoom sells toy bricks that can be used to construct a wide range of machines, animals, buildings, and so on. It purchases a red dye powder to include in the resin it uses to make the bricks. The powder is purchased from a supplier for $1.3 per kg. At one production facility, BZoom requires 400 kg of this red dye powder each week. BZooms annual holding costs are 30 percent and the fixed cost associated with each order to the supplier is $50.

BZooms purchasing manager negotiated with its supplier to get a 2.5 percent discount on orders of 10,000 kg or greater? What would be the change in BZooms annual total cost (purchasing, ordering, and holding) if it took advantage of this deal instead of ordering smaller quantities at the full price?

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