With a fixed cost of $100 per order, Nathan decided it was vital to get his...

   

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With a fixed cost of $100 per order, Nathan decided it was vital to get his money's worth. His monthly demand for energy drinks was 10,000 bottles and holding cost was estimated at 20% of unit cost. The mail order company offered him a couple of possibilities - he could pay $4.00 per bottle for orders of up to 10,000 bottles. After that threshold, he would pay only $3.98 per bottle, and if he ordered 20,000 or more bottles in an order, he would pay only $3.96 per bottle. 1) What is the best order quantity for Nathan to use? 2) What is the best total cost that Nathan can incur? With a fixed cost of $100 per order, Nathan decided it was vital to get his money's worth. His monthly demand for energy drinks was 10,000 bottles and holding cost was estimated at 20% of unit cost. The mail order company offered him a couple of possibilities - he could pay $4.00 per bottle for orders of up to 10,000 bottles. After that threshold, he would pay only $3.98 per bottle, and if he ordered 20,000 or more bottles in an order, he would pay only $3.96 per bottle. 1) What is the best order quantity for Nathan to use? 2) What is the best total cost that Nathan can incur?

Answer rating: 100% (QA)

To determine the best order quantity for Nathan to use and the best total cost he can incur we will compare the cost implications of each discount tie... View the full answer