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McMasker's gets a call from Elastic Band manufacturer. Elastic Band is going to offer McMaskers a discount for the bands on their paper masks. McMasker's
McMasker's gets a call from Elastic Band manufacturer. Elastic Band is going to offer McMaskers a discount for the bands on their paper masks. McMasker's is buying 720,000 sets of elastic bands per month. Their fixed costs are $40,000 for each order. Each set cost $0.50 and has an annual holding cost of 20%. Elastic Band is offering a 10% per unit all unit discount with a minimum order quantitiy, MOQ, of 3,000,000.(constraint) Q1.How does the discount impact inventory cost? Q2.How does the discount impact set up (Fixed) costs Q3.The elastic band company was a bottleneck to McMasker's paper masks. Who benefits more from this deal? Explain
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