Mac-in-the-Box sells computer equipment by mail and telephone order. Mac sells 2,400 flat-bed scanners per year. Ordering cost is $300 and the annual holding cost is 25 percent of the item's price. There are 300 working days in the year and the lead time is 3 days. The scanner manufacturer offers the following price structure to Mac-in-the Box:
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Order Quantity
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Price per Unit
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1 to 199
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$520.00
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200 to 499
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$515.00
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500 or more
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$512.00
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- Given the above information and basing your decision on the economics, what order quantity do you recommend that Mac order from the scanner manufacturer? Why?
- How much more expensive is the next lowest cost option?
- For the optimal order quantity, what is the inventory position immediately after an order is placed?