Quantity Discount and Inventory Management Worksheet

Why do suppliers typically offer quantity discounts?

• To reduce the inventory holding cost for buyers

• To achieve economies of scale in shipping and packaging

• To comply with regulations

• To decrease demand

Which of the following is not part of total inventory cost in the Quantity Discount model?

• Ordering cost

• Holding cost

• Purchase cost

• Advertising cost

If a buyer orders 50 units, what is the purchase cost?

• $900

• $1,000

• $1,800

• $2,000

In the Quantity Discount model, why must we sometimes check a higher price range even if a lower price exists?

• Higher prices always give higher demand.

• Lower price might require larger quantities that increase holding cost.

• Higher prices reduce ordering costs.

• EOQ formula does not apply at lower prices.

• 60 units

• 100 units

• 140 units

• 160 units

• $50 per unit

• $48 per unit

• $45 per unit

• None of the above

• $1.50

• $1.90

• $2.00

• $9.50

• 200 units

• 300 units

• 400 units

• 600 units

• Order 200 units at $10

• Order 300 units at $9.80

• Order 400 units at $9.80

• Both A and B have the same cost

• Not feasible; check the $20 price level

• Feasible; calculate total cost at 1,200 units

• Not feasible; directly check the $18 price level

• Automatically choose the lowest unit price ($18)