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EOQ with
quantity discounts (EOQDISC)
Excel
Spreadsheet Template for Economic order quantity (EOQ) with
quantity discounts.
The basic EOQ
model in finds that particular quantity to order which
minimizes the total variable costs of inventory. OM-EOQDISC
should be used for cases where vendors offer price discounts
based on the quantity purchased.
Many companies
blindly purchase in large quantities to get discount prices
without considering all the tradeoffs involved. The costs may
well outweigh any savings in purchase price. The EOQDISC model
helps you analyze quantity discount offers and make better
purchasing decisions.
If you are in a position to bargain with the vendor on prices,
use EOQDISC to find the breakeven price. This is the price at
which you are indifferent about taking the discount because
the annual costs for the standard price and the discount price
are the same. You can use the breakeven price as the starting
point for negotiating a better discount plan, one that
benefits both vendor and customer.
Vendors sometimes offer several different price/quantity
plans, so EOQDISC is set up to evaluate four discount plans at
once.
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