Discount Pricing Schedule Assignment


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 QuantityCost per Box
100-199$75
200-499$50
500 or more$25
  1. Evaluate the number of boxes that the company should order in each lot in order to minimize the total cost of inventory.
  2. What does the total inventory cost?
  3. How many orders should the company place in a year in order to minimize the total cost of inventory?
  4. Do the annual holding cost and annual ordering cost the same? Why and why not. Get Accounting homework help today

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