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Wang Distributors has an annual demand for an airport metal detector of 1,400 units. The cost of a typical detector to Wang is $400. Carrying cost is estimated to be 20% of the unit costs, and the ordering is $25 per order. If Ping Wang, the owner, orders in quantities of 300 or more, he can get a 5% discount on the cost of the detectors. Should Wang take the quantity discount?
1. A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier charges $20 per stone, annual carrying costs are 50%, and the cost of processing orders is $40.
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