Problem: Consider a DAG supermarket selling chicken noodle soup manufactured by the Campbell Soup Company. Customer demand for chicken noodle soup is R cans per year. The price Campbell charges is $C per can. DAG incurs a holding cost rate of α. The ordering cost is $K per order. Using the EOQ formula, DAG normally orders in the following lot sizes:
Q* = √(2RK/αC)
Campbell announces that it is offering a one-time-only discount of $d per can. Let Qd be the lot size ordered at the discounted price. Let t := Qd=Q*