An electronics retailer sells laptops at a steady rate of 7,500 per quarter. It costs the manufacturer $350 to make each laptop, and they charge $400/laptop to the retailer. The manufacturer produces the laptop at a steady rate that matches demand, and incurs a fixed cost of $2,800 to fulfill each retail order. Both the retailer and the manufacturer have an annual holding cost percentage of 20%. The retailer places 10 orders with the laptop manufacturer each quarter (which it determined from an EOQ calculation). What are the retailer’s and manufacturer’s costs under this current setup, as well as the total supply chain cost? What quantity discount should the manufacturer offer the retailer in order to minimize the total supply chain costs? Under this quantity discount, what are the new retailer and manufacturer costs? Does the retailer choose to use the quantity discount?
An electronics retailer sells laptops at a steady rate of 7,500 per quarter. It costs the manufacturer $350 to
make each laptop, and they charge $400/laptop to the retailer. The manufacturer produces the laptop at a
steady rate that matches demand, and incurs a fixed cost of $2,800 to fulfill each retail order. Both the
retailer and the manufacturer have an annual holding cost percentage of 20%. The retailer places 10
orders with the laptop manufacturer each quarter (which it determined from an EOQ calculation). What
are the retailer’s and manufacturer’s costs under this current setup, as well as the total supply chain cost?
What quantity discount should the manufacturer offer the retailer in order to minimize the total supply
chain costs? Under this quantity discount, what are the new retailer and manufacturer costs? Does the
retailer choose to use the quantity discount?
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