(Answered) You order a part from a vendor that has a purchase cost of

Management Studies

You order a part from a vendor that has a purchase cost of $15 per unit. The ordering cost is estimated to be $300 per order, whereas the carrying cost is estimated as $3 per unit/year. The annual requirement of this part is estimated to be 20,000 units.

A) How many units should be ordered every time?

B) A new supplier is willing to give you a 5% discount on the purchase if you are willing to buy at least 5,000 units. Should you take the discount? Justify your answer.

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