Charles has been buying a water conditioner for its bait in an optimal fashion using EOQ analysis. The supplier has now offered Charles a discount of $0.50 off all units if the firm will make its purchases monthly or $1.00 off if the firm will make its purchases quarterly. Data for the problem: D = 720 units per year; S = $6.00, I = 20% per year; P = $25.

Analyze this quantity discount problem and recommend what should Charles do?

Range 1 Range 2 Range 3

Quantity 1-59 60-179 179+

Unit Price $25 $24.5 $24