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Company ABC purchases 60,000 boxes of staples every year. Ordering costs are $30 per order, carrying costs are 3% of the inventory value, and the
Company ABC purchases 60,000 boxes of staples every year. Ordering costs are $30 per order, carrying costs are 3% of the inventory value, and the price is of $0.50 per box. The company currently orders at EOQ level to minimize the total inventory costs. The vendor now offers a quantity discount of 1% per box if the company orders 20,000 boxes per time. Should the company accept the quantity discount? Show your calculations to justify your decision.
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