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With a fixed cost of $100 per order, Nathan decided it was vital to get his money's worth. His monthly demand for energy drinks was 10,000 bottles and holding cost was estimated at 20% of unit cost. The mail order company offered him a couple of possibilities -
The marginal unit discount pricing schedule is:
Order Quantity
Marginal Unit Price
0-10,000
C0 = 4.00
10,000-20,000
C1 = 3.98
Over 20,000
C2 = 3.96
1) What is the best order quantity for Nathan to use? Answer:
2) What is the best total cost that Nathan can incur? Answer:
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