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

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