Determine total cost by using incremental discounts


Problem: Luigui Casiraghi´s company sells a specific automotive motor filter for cars. For quantities up through 100, the firm charges $400 per filter; for quantities between 101 and 200, it charges $300 for each filter purchased; and it charges $200 each for the additional quantities over 200 filters. So many car shops expect to require these motor filters for the next 5 years at a rate of least 400 filters every 15 days. Order set up costs is $250 and holding costs are based on a 45 percent annual interest rate. What should be the size of the standing order and total cost by using incremental discounts? Assume that there is a uniform demand and you have 26 periods of 15 days per year.

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Other Management: Determine total cost by using incremental discounts
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