Happy Pet, Inc., is a large pet store located in LongBeach Mall. Although the store specializes in dogs, it a lso sellsfish, turtle, and bird supplies. The Everlast Leader, a leather leadfor dogs, costs Happy Pet $7 each. There is an annual demand for6,000 Everlast Leaders. The manager, Stephan Wagner, has determinedthat the ordering cost is $20 per order and the carrying cost,as a percentage of unit cost, is 15%. Happy Pet is now consideringa new supplier of Everlast Leaders. Each lead would cost only$6.65, but, in order to get this discount, Happy Pet would have tobuy shipments of 3,000 at a time. Should Happy Pet use the newsupplier and take this discount for quantity buying?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Happy Pet, Inc., is a large pet store located in Long
Beach Mall. Although the store specializes in dogs, it a lso sells
fish, turtle, and bird supplies. The Everlast Leader, a leather lead
for dogs, costs Happy Pet $7 each. There is an annual demand for
6,000 Everlast Leaders. The manager, Stephan Wagner, has determined
that the ordering cost is $20 per order and the carrying cost,
as a percentage of unit cost, is 15%. Happy Pet is now considering
a new supplier of Everlast Leaders. Each lead would cost only
$6.65, but, in order to get this discount, Happy Pet would have to
buy shipments of 3,000 at a time. Should Happy Pet use the new
supplier and take this discount for quantity buying?
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