Bank Drugs Sells Jami Michelle Lipstick

question 39

Short Answer

Bank Drugs sells Jami Michelle lipstick. The Jami Michelle Company offers a 6% discount on orders of at least 500 tubes, a 10% discount on orders of at least 1,000 tubes, a 12% discount on orders of at least 1,800 tubes and a 15% discount on orders at least 2,500 tubes.
Bank sells an average of 40 tubes of Jami Michelle lipstick weekly. The normal price paid by Bank drugs is $1 per tube. If it costs Bank $30 to place an order, and Bank's annual holding cost rate is 27%, determine the optimal order policy for Bank Drugs.

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Definitions:

Excess Supply

A situation in a market where the quantity of a good or service available exceeds the quantity demanded at the current price, leading to surplus.

Scarcity

A basic issue in economics where human desires appear unlimited, but the world has finite resources.

Price of Contact Lenses

The cost at which contact lenses are sold, determined by factors like brand, technology, supply, and demand.

Supply of Contact Lenses

The total amount of contact lenses that manufacturers are willing and able to sell at a given price level.