What is the smallest discount (new discount price), that ACME needs to offer BAKER to make it economical to purchase 4500 units next time?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter10: Introduction To Simulation Modeling
Section10.4: Simulation With Built-in Excel Tools
Problem 14P
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What is the smallest discount (new discount price), that ACME needs to offer BAKER to make it economical to purchase 4500 units next time?
ACME Company is a big supplier that wants to make it difficult for
new suppliers to take sales away from its important customer
BAKER. Currently ACME sells BAKER 18000 units yearly at a cost
of S75 per unit. And BAKER is placing orders of EOQ. ACME wants
BAKER to increase the size of its next order to 4500 units by
offering a price discount. Ordering costs are $3250 per order and
holding cost is 30% of item value.
Transcribed Image Text:ACME Company is a big supplier that wants to make it difficult for new suppliers to take sales away from its important customer BAKER. Currently ACME sells BAKER 18000 units yearly at a cost of S75 per unit. And BAKER is placing orders of EOQ. ACME wants BAKER to increase the size of its next order to 4500 units by offering a price discount. Ordering costs are $3250 per order and holding cost is 30% of item value.
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