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Victor, a manufacturer of lawn mowers, predicts that it will purchase 660,000 spark plugs next year. Victor estimates that 55,000 spark plugs will be required
Victor, a manufacturer of lawn mowers, predicts that it will purchase 660,000 spark plugs next year. Victor estimates that 55,000 spark plugs will be required each month. A supplier quotes a price of $98 per spark plug The supplier also offers a special discount option: if all 660,000 spark plugs are purchased at the start of the year, a discount of 3% off the $98 price will be given Victor can invest its cash at 7% per year. It costs Victor $15 to place each purchase order. Calculate and enter the amount of difference in relevant costs of purchasing 660,000 spark plugs at beginning of year as against purchasing every month. A positive number would indicate that purchasing all at beginning of year is more costly; while a negative balance would indicate that purchasing monthly would be more expensive
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