Learn how to calculate the costs of ordering at certain minimum levels with quantity discounts to find the lowest overall cost to your business.
- [Instructor] If you have ever…purchased items for a store inventory…or t-shirts for a club, you know that…manufacturers give discounts…if you purchase large quantities of the items.…In this movie I will show you how to calculate…the cost of ordering, at certain minimum levels,…to find the lowest overall cost to your business.…As my sample file, I'll use the Quantity Discounts workbook.…You can find that in the Chapter 4 folder…of the Exercise Files collection.…The scenario is that I'm a regular purchaser of items…from a supplier and they have decided…to offer me quantity discounts.…
The discounts are shown in the table…that I have in cells D2 through G6.…For any quantity up to 1,000 I pay full price.…If I buy 1,000 then the price becomes $14.70,…with the 2% discount.…2,500 goes to 14.25.…And 5,00 and above, I pay 13.50.…So the question is, what is…the best quantity to buy that reduces my total cost?…And that will be a factor of the Annual Product Cost,…Annual Ordering Cost and Annual Holding Cost…for each of my order levels.…
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- Drawing process flow diagrams
- Calculating process capacity
- Identifying bottlenecks
- Determining cycle time and idle time
- Calculating labor
- Calculating utilization
- Analyzing batch processes
- Calculating optimal order quantities