Mac-in-the-Box sells computer equipment by mail and telephone order. Mac sells 1,200 flat-bed scanners per year. Ordering cost is $300 and annual holding cost is 16 percent of the item's price. The scanner manufacturer offers the following price structure to Mac-in-the Box
Order Quantity Price per Unit
1 to 100 $520.00
101 to 140 $500.00
141 or more $400.00
a) Given the above information and basing your decision on a cost analysis, what order quantity do you recommend that Mac order from the scanner manufacturer? Why?
b) Provide the total inventory cost of the next best option including the acquisition cost of the scanners (calculate total cost)