Pampered Pets, Inc:Quantity discount problem
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12-20 Pampered Pets, Inc., is a large pet store located in Eastwood Mall. Although the store specializes in dogs, it also sells fish, turtle, and bird supplies. Everlast Leaders, which are leather leads for dogs, cost Pampered Pets $7 each. There is an annual demand for 6,000 Everlast Leaders. The manager of Pampered Pets has determined that the ordering cost is $10 per order,
and the carrying cost, as a percentage of the unit cost, is 15%. Pampered Pets is now considering a new supplier of Everlast Leaders. Each lead would cost only $6.65, but to get this discount, Pampered Pets would have to buy shipments of 3,000 Everlast Leaders at a time. Should Pampered Pets use the new supplier and take this discount for quantity buying?
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This posting contains solution to following inventory problem on Pampered Pets, Inc
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