The bookstore at State University purchases from a vendor sweatshirts emblazoned with the school name and logo. The vendor sells
the sweatshirts to the store for $36 apiece. The cost to the bookstore for placing an order is $110, and the carrying cost is 15% of the purchase price. The bookstore manager estimates that 1,340 sweatshirts will be sold during the year. The vendor has offered the bookstore the following volume discount schedule:
Discount Carrying cost
Order Size Price
1-299 0%
300-499 2%
500-799 4%
800+ 5%
The bookstore manager wants to determine the bookstore's optimal order quantity, given the foregoing quantity discount information.
1. Determine carrying cost as a percentage of purchase price information.
2. Calculate TC for each EOQ.
3. What is the bookstore's optimal order quantity?
4. With Quantity discounts carrying costs will vary with the the change in price if it computed as a percentage of purchase price.
5. Calculate EOQ for each discount price.
Discount Carrying cost
Order Size Price
1-299 0%
300-499 2%
500-799 4%
800+ 5%
The bookstore manager wants to determine the bookstore's optimal order quantity, given the foregoing quantity discount information.
1. Determine carrying cost as a percentage of purchase price information.
2. Calculate TC for each EOQ.
3. What is the bookstore's optimal order quantity?
4. With Quantity discounts carrying costs will vary with the the change in price if it computed as a percentage of purchase price.
5. Calculate EOQ for each discount price.
1 answer:
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Answer:
D. There is no mistake.
Step-by-step explanation:
The following lines show the process of factorization by using common factor.
<u>Line 1:</u>
In line 1, the equation is given and is completely fine.
The only thing missing was equate to zero, but the options below talk about correct factors only, therefore this can't be considered as a mistake and can be ignored completely.
<u>Line 2:</u>
In line 2, the terms are grouped, from which we can factor out common terms.
This is also fine.
<u>Line 3:</u>
In line 3, the common term y is taken out from group 1 and 2 from other group.
which is exactly what is given in line 3.
<u>Line 4:</u>
In line 4 the common factors can be seen and easily split into 2 factors.
which is exactly what is given in line 4.
Options:
A. The grouping is correct in line 2. So this option is does not hold.
B. Common factor was factored correctly from group 1. So this option does not hold.
C. Common factor was factored correctly from group 2. So this option does not hold.
D. There is no mistake. This is correct. Thus we choose this option as correct answer.