supply cahin

2. Using the spreadsheet calculate a quantity discount analysis for a quote using range quantities.

3. What quantity should Minnie order if she wants to receive the lowest incremental costs between quantities? Quantity Range
Quoted Price
Quantity Range
Incremental Cost
1-999
$4.03
First 999 units
$4.03
1000-1999
$4.00
next 999 units
$3.97
2000-2999
$3.97
next 999 units
$3.91
At least 3000
$3.94

$-

Minnie should go with the range of ordering between 2000-2999 in order to achieve the lowest incremental cost. The range of incremental cost is depicted in the table above.

4. Are the optimal order quantity based on #1 and #3 the same? Is there anything unusual about this quote? No, the optimal order quantity is different to each other, in case of #1 the optimal order quantity should be in the range of 1-999 whereas with respect to #3, the optimal order quantity falls in the range of 2000-2999 where is attains the lowest incremental cost. In case of #1, we are finding the optimal EOQ where it denotes the number of orders that is to be placed each time in accordance to total minimal cost that is attained but in #3, we are calculating the cost that has impact on incremental units and thus the discount is applied only to incremental units and not to the entire order hence the comparison of this is not valid.

5. Assume the answer to #4 is different, should Minnie order based on #1 or #3, and why?
Justify your answer. Minnie should go with #1, because the total cost attained in #1 with the range of 1-999 is 20291.95 and with the range of 3000 she incurs the cost of 20299.33; whereas on calculating #3 with incremental cost and assuming he orders 3000 units the cost raises to 23718.09 which much higher than the cost calculated in #1.