Suppose Stanley's Office Supply purchases 50,000 boxes of pens every year. Ordering costs are $100 per order and carrying costs are $0.40 per box. Moreover, management has determined that the EOQ is 5,000 boxes. The vendor now offers a quantity discount of $0.20 per box if the company buys pens in order sizes of 10,000 boxes. Determine the before-tax benefit or loss of accepting the quantity discount. (Assume the carrying cost remains at $0.40 per box whether or not the discount is taken.)

The manager of a car wash received a revised price list from the vendor who supplies soap, and a promise of a shorter lead time for deliveries. Formerly the lead time was four days, but now the vendor promises a reduction of 25 percent in that time. Annual usage of soap is 4,500 gallons. The car wash is open 360 days a year. Assume that daily usage is normal, and that it has a standard deviation of 2 gallons per day. The ordering cost is $30 and annual carrying cost is $3 a gallon. The revised price list (cost per gallon) is shown in the following table: Quantity 1 - 399 400 799 800 + Unit Price $2.00 1.70 1.62 Click here for the Excel Data File a. What order quantity is optimal? (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.) Optimal order quantity ROP b. What ROP is appropriate if the acceptable risk of a stockout is 1.5 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) gallons…

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