Our collegepurchases sweatshirts from a vendor emblazoned with the collegename and logo. The vendor sells the sweatshirts to the college for45 SAR a piece. The cost to the college for placing an order is 175SAR and the carrying cost is 20% of the average annual inventoryvalue. The college administration estimates that 2,000 sweatshirtswill be sold during the year. The vendor has offered the collegethe following volume discount schedule:
Quantity | Discount(%) |
1 –299 | 0% |
300 –499 | 5% |
500 –799 | 8% |
800+ | 12% |
The college admin staff wants to determine the optimal orderquantity, given the foregoing quantity discount information.
