A supplier of MacoriX Inc., offers the following discounts according to the amount of the ordered,
OPTION AMOUNT DISCOUNT % UNITARY COST
1 0-999 0% $5.00
2 1000-2649 4% $4.70
3 >= 2650 6% $4.25
MacoriX provides the following information: Annual Demand=5000 units, Unit Cost=$49, and Holding Cost=20%/unit/year.
a. What is the amount of products that should be ordered and the total annual cost?
b. If you need 10,000 units, how many order per year should be done to reduce the total cost of acquiring the units?
c. If the company can only hold an average of 4,750 units, would your conclusions change?