ompany ABC purchases 60,000 boxes of staples every year. Ordering costs are $30 per order, carrying costs are 5% of the inventory value, and the price is of $1.75 per box. The company currently orders at EOQ level to minimize the total inventory costs. The vendor now offers a quantity discount of 1% per box if the company orders 20,000 boxes per time. 

Should the company accept the quantity discount?

Answer rating: 100% (QA)

First lets calculate the EOQ Economic Order Quantity EOQ sqrt2DSH where D annual demand 60000 boxes ... View the full answer