Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You are managing inventory for a small chain of stores that sell a popular brand of wireless headphones at a rate of 192/week. Each unit
You are managing inventory for a small chain of stores that sell a popular brand of wireless headphones at a rate of 192/week. Each unit sells for $50. The chain is considering purchasing a large stock of these headphones from the manufacturer, who offers quantity discounts. The employee placing the order spends about 5 hours gathering information, creating invoices, acquiring signoffs, and ultimately submitting the order electronically. This employee makes $20 per hour. Annual holding cost per unit is 4%. Your task is to determine the optimal order quantity considering these discounts: Level 1 Discount: 2% off on orders of 500 units or more Level 2 Discount: 5% off on orders of 2,000 units or more Level 3 Discount: 8% off on orders of 4,000 units or more a. Which discount is optimal? b. How many orders are placed per year with the optimal solution? c. What is the annual cost of the optimal solution
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started