CMA Study Group

Hi,

entity uses 400 lbs. of isotope per year. 

isotope costs $500 per lb.

supplier is offering a quantity discount of 2%

for order sizes between 30 and 79 lbs. 

and a 6% discount for order sizes of 80 lbs. and above.

ordering costs are $200.

Carrying costs are $100 per lb. of material

If eight orders of 50 lbs. each, the total cost of ordering and carrying inventory, including discounts lost, will be.

answer----

200 x 8 = 1600

100 x (50/2) = 2500

200K x 4% = 8000

= 12100.

my question is why are they dividing 50 by 2 here to get 25 x 100?

Thanks. 

Hello,

does this happen every time? 

or just in this specific question? 

Original Message:
Sent: 01-05-2016 11:38 PM
From: Krishnanand Indhamath
Subject: Carrying Costs

Hi

 

We are dividing 50 qty by 2 to arrive at the average quantity.