Suppose that a company buys about $81,000 worth of items from a vendor each year. If ordering cost is $25 per order and holding cost rate is 20%

The vendor will offer you a 2% discount if you buy at least $9,000 of items in each order. Should you accept this offer? If no, what is a fair counter offer?

Annual demand = 81,000 items

Purchasing (ordering) costs = $25 per order

Annual hold cost = 25%

Cost of each item = $1