We need 1,000 electric drills per year. The ordering cost for these is $100 per order and the carrying cost is assumed to be 40% of the per unit cost. In orders of less than 120, drills cost $78; for orders of 120 or more, the cost drops to $50 per unit.

Should we take advantage of the quantity discount?

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Answer rating: 100% (QA)

The firm cannot take advantage of the quantity discount because the Economic Order Quantity under th... View the full answer