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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 10,000 units yearly at a cost of $75.75 per unit. And BAKER is placing orders of EOQ. ACME wants BAKER to increase the size of its next order to 3900 units by offering a price discount. Ordering costs are $320 per order and holding cost is 20% of item value. What is the smallest discount (new discount price), that ACME needs to offer BAKER to make it economical to purchase 3900 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 10,000 units yearly at a cost of $75.75 per unit. And BAKER is placing orders of EOQ. ACME wants BAKER to increase the size of its next order to 3900 units by offering a price discount. Ordering costs are $320 per order and holding cost is 20% of item value. What is the smallest discount (new discount price), that ACME needs to offer BAKER to make it economical to purchase 3900 units next time?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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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 10,000 units yearly at a cost of $75.75 per unit. And BAKER is placing orders of EOQ. ACME wants BAKER to increase the size of its next order to 3900 units by offering a price discount. Ordering costs are $320 per order and holding cost is 20% of item value. What is the smallest discount (new discount price), that ACME needs to offer BAKER to make it economical to purchase 3900 units next time?
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 10,000 units yearly at a cost of $75.75 per unit. And BAKER is placing orders of EOQ. ACME wants BAKER to increase the size of its next order to 3900 units by offering a price discount. Ordering costs are $320 per order and holding cost is 20% of item value. What is the smallest discount (new discount price), that ACME needs to offer BAKER to make it economical to purchase 3900 units next time?
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