Discount Pricing Schedule Assignment
A mail-order company uses 200 boxes a month. The company incurs a fixed order placement, transportation and receiving cost of $96 each time an order is placed with the manufacturer. The holding cost is 20 percent of the cost. The manufacturer uses the following unit discount pricing schedule.
|Order Quantity||Cost per Box|
|500 or more||$25|
- Evaluate the number of boxes that the company should order in each lot in order to minimize the total cost of inventory.
- What does the total inventory cost?
- How many orders should the company place in a year in order to minimize the total cost of inventory?
- Do the annual holding cost and annual ordering cost the same? Why and why not. Get Accounting homework help today