Question

Consider the all-units quantity discount schedule below.

Price Bracket	Quantity Ordered	Price Per Unit	EOQ at that Price
1	1-1999	$100	3,527
2	2000-3999	$90	3,717
3	4000-5999	$80	3,925
4	6000-7999	$70	4,464
5	8000+	$60	4,611

If you want to take advantage of the price discount in Price Bracket 4, what minimum order quantity must you purchase?

Answer 1

Answer: If you want to take advantage of the price discount in price Bracket 4, you must order minimum 6000 units.

Because Supplier wil supply at a discounted price of $70 only if you order quantity between 6000 to 7999 units. Price Bracket 4 = 6000 to 7999 units.

Even though the EOQ in that price bracket is 4464, which means for that price if you order 4464 units, Inventory cost will be minimum but by ordering 4464 units you won't be able to get the discount which is available only if you order between 6000 to 7999 units.

So you must purchase minimum of 6000 units to take advantage of price discount in Price Bracket 4.