Each year, Holly's Best Salad Dressing, Inc. (HBSD) purchases 50,000 gallons of extra virgin olive oil....

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Each year, Holly's Best Salad Dressing, Inc. (HBSD) purchases 50,000 gallons of extra virgin olive oil. Ordering costs are $100 per order, and the carrying cost, as a percentage of inventory value, is 80 percent. The purchase price to HBSD is $0.50 per gallon. Management currently orders the EOQ each time an order is placed. No safety stock is carried. The supplier is now offering a quantity discount of $0.03 per gallon if HBSD orders 10,000 gallons at a time. Should HBSD take the discount? a. No, the cost exceeds the benefit by $1,000. b. Yes, the benefit exceeds the cost by $1,120. c. From a cost standpoint, HBSD is indifferent. d. Yes, the benefit exceeds the cost by $500. ● e. No, the cost exceeds the benefit by $500. Each year, Holly's Best Salad Dressing, Inc. (HBSD) purchases 50,000 gallons of extra virgin olive oil. Ordering costs are $100 per order, and the carrying cost, as a percentage of inventory value, is 80 percent. The purchase price to HBSD is $0.50 per gallon. Management currently orders the EOQ each time an order is placed. No safety stock is carried. The supplier is now offering a quantity discount of $0.03 per gallon if HBSD orders 10,000 gallons at a time. Should HBSD take the discount? a. No, the cost exceeds the benefit by $1,000. b. Yes, the benefit exceeds the cost by $1,120. c. From a cost standpoint, HBSD is indifferent. d. Yes, the benefit exceeds the cost by $500. ● e. No, the cost exceeds the benefit by $500.

Answer rating: 100% (QA)

Annual Quantity 50000 gallons Ordering Costs 100 per order Carrying cost 80 of Cost 080050 04... View the full answer