Inventory problem: Quantity discount model
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Price-Mart.com stores sells an average of two thousand pairs of the Excite brand of jeans per week. While the jeans normally cost retailers $16.00 per pair, Excite offers customers discounts on all pairs ordered if the order exceeds certain threshold amounts. In particular, the discount pricing schedule is as follows:
Order Quantity Price per Unit
1 -1000 pairs $16.00
1001 -5000 pairs $15.20
5,001 -10,000 pairs $14.40
Over 10,000 pairs $13.60
Price-Mart.com wishes to determine how many pairs of jeans it should order if the cost of placing an order is $200 and the annual holding cost rate for jeans is 15%.
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Price-Mart.com stores sells an average of two thousand
pairs of the Excite brand of jeans per ...
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