10.6. A city bar has an annual demand of 9000 boxes, which it purchases at a price of $60 per box. The annual carrying cost is $8 and the cost per order is $160. The distributor has offered the bar a reduced price of $56 per box if it orders a quantity of 300.

Should the bar take the discount?

Answer. Yes, taking the discount will result in total savings of $34,800 per year.