Annual demand, D450000
Order cost per lot, S10,000.00$
Unit cost, C550.00$
Holding cost 20%
Economic order quantity 9,045
Per unit discount, d40.00$
Quantity ordered by retailer 16,814
We start with calculating the economic order quantity for the retailer.
Now we consider the retailer’s response when Orange discounts J-Pods by
$40.