Suppose the supplier of keyboards described in Example 1.2 is willing to offer the following incremental quantity discount schedule:

Determine the cost to the firm for order quantities in increments of 20,000 for Q 200,000 to Q 1,000,000, and compare that to the cost to the firm of producing internally for these same values of Q. What is the break-even order quantity?

Transcribed Image Text:

Cost per Keyboard $50 $45 $40 Order Quantity Q=100,000 100,000