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Drugs Online ( DO ) is an online retailer of prescription drugs and health supplements. Vitamins represent a significant percentage of its sales. Demand for

Drugs Online (DO) is an online retailer of prescription drugs and health supplements. Vitamins represent a significant percentage of its sales. Demand for vitamins is 10,000 bottles per month. DO incur a fixed order placement, transportation, and receiving cost of $100 each time an order for vitamins is placed with the manufacturer. DO incur a holding cost of 20 percent. The price charged by the manufacturer follows the all-unit discount pricing schedule shown following. Evaluate the number of bottles that the DO manager should order in each lot.
[15 Marks]
Schemes
Order Quantity
Unit Price
Scheme 1
0-10000
$3.00
Scheme 2
10,000-25000
$2.95
Scheme 3
25,000 or more
$2.90

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