Currently, a company places orders for diaries to give away as tokens for its customers. Each diary costs the company $137.50. It costs the company $0.65 to place an order for the diaries and $0.87 to carry each diary annually in its inventory. The suppliers wish to offer the company a deal on the cups, by having it pay $85 for each diary, but ONLY if the company orders in sizes of 500 instead of the usual amount. Annual demand for the cups is 8000. Should the company accept the deal?
Currently, a company places orders for diaries to give away as tokens for its customers. Each diary costs the company $137.50. It costs the company $0.65 to place an order for the diaries and $0.87 to carry each diary annually in its inventory. The suppliers wish to offer the company a deal on the cups, by having it pay $85 for each diary, but ONLY if the company orders in sizes of 500 instead of the usual amount. Annual demand for the cups is 8000. Should the company accept the deal?
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Currently, a company places orders for diaries to give away as tokens for its customers. Each diary costs the company $137.50. It costs the company $0.65 to place an order for the diaries and $0.87 to carry each diary annually in its inventory. The suppliers wish to offer the company a deal on the cups, by having it pay $85 for each diary, but ONLY if the company orders in sizes of 500 instead of the usual amount. Annual demand for the cups is 8000. Should the company accept the deal?
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