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Crystal Ltd currently orders 10 000 units per month of Product X. The demand for Product X is constant. There is only one supplier of Product X and the cost per unit is R10. The supplier has offered a 5% discount for orders of 20,000 units or more. The cost per order is R250 and the holding cost per unit per year is R1,50. Crystal Ltd is required to keep 750 units on hand at all times as safety stock. REQUIRED: Calculate the cost of the bulk discount offered by the supplier and net benefit, if any. Comment on your findings. Round off all your answers to two decimal places.

Crystal Ltd currently orders 10 000 units per month of Product X. The demand for Product X is constant. There is only one supplier of Product X and the cost per unit is R10. The supplier has offered a 5% discount for orders of 20,000 units or more. The cost per order is R250 and the holding cost per unit per year is R1,50. Crystal Ltd is required to keep 750 units on hand at all times as safety stock. REQUIRED: Calculate the cost of the bulk discount offered by the supplier and net benefit, if any. Comment on your findings. Round off all your answers to two decimal places.

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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Crystal Ltd currently orders 10 000 units per month of Product X. The demand for Product X is constant. There is only one supplier of Product X and the cost per unit is R10. The supplier has offered a 5% discount for orders of 20,000 units or more. The cost per order is R250 and the holding cost per unit per year is R1,50. Crystal Ltd is required to keep 750 units on hand at all times as safety stock.

REQUIRED:

Calculate the cost of the bulk discount offered by the supplier and net benefit, if any. Comment on your findings. Round off all your answers to two decimal places.

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