Problem 1: Sarah's Organic Soap Company makes organic liquid soaps. She purchases organic Palm oil to make her soaps. She needs 1,000 kgs of Palm oil per day on average. The supplier charges a $60 delivery fee per order (which is independent of the order size). Sarah's annual holding cost is $1.825 per kg of palm oil. Assume there are 365 days a year.
Problem 2: Again, assume that Sarah needs 1,000 kgs of Palm oil per day. Sarah's supplier is willing to sell Palm oil to her at a 10% discount on its selling price if she purchases 10,000 kgs at a time. If Sarah takes the offer and orders 10,000 kg at a time, how much will be the resulting daily cost of ordering and holding?
(Assume that the fixed cost of ordering is $60 per order and the per unit inventory holding cost is 0.005 per day per kg of Palm oil.)
Problem 3: Again, assume that Sarah needs 1,000 kgs of Palm oil per day. Sarah's supplier is willing to sell Palm oil to her at a 10% discount on its selling price if she purchases 10,000 kgs at a time. The current selling price for Palm oil before the quantity discount is $5 per kg. If Sarah takes the offer and orders 10,000 kg at a time, how much does she save on the cost of Palm oil each day?
(Note that the daily cost of Palm oil is determined by the daily demand multiplied by the selling price.)