Question II

Question II The PriceRite big box discount center orders printer cartriges from a manufacturer in the Far East.  PriceRite annual demand for the printer cartridges is 6000 units.  Assume that demand is steady, and the lead time is zero.  The fixed cost per order is $200, while the inventory carrying cost is 25%.  The wholesale price is $45 per unit.  The supply firm has just offered PriceRite a quantity discount contract:  if they place an order of at least 2000 units, the price will be $44 per unit.  Build a spreadsheet model to evaluate the quantity discount offer. Input Description    Symbol    Value    Metric Annual demand    D         cases Regular price    V         /case Discount price    V_         /case Minimum order quantity    MOQ         cases/order Ordering cost    A         /order Carrying cost factor    H         /case/yr Result Description    Symbol    Regular    Symbol    Discount Economic order quantity    EOQ        EOQ_ Actual order quantity    AOQ        AOQ_ Number of order per year    N        N_ Cycle stock    CS        CS_ Annual ordering cost    OC        OC_ Annual carrying cost    CC        CC_ Annual purchase cost    PC        PC_ Total relevant cost    TRC        TRC_ Savings from discount            SAV