Quantity Discount Analysis Answers

Quantity Discount Analysis Answers - Case Discussion:...

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or distributed without the prior consent of the publisher. 1 Case Discussion: Quantity Discount Analysis (QDA) This case requires students to calculation quantity discount analysis two ways. The first requires a calculation of price breaks at specific quantities while the second requires a calculation of price breaks for ranges of quantities. Quantity discount analysis (QDA), as presented in this text, examines incremental costs associated with quantity discount schedules. Suppliers develop quantity discount schedules as a means of enticing buyers to order greater quantities. The goal of using the QDA tool is to determine if the incremental cost of an additional unit is, in reality, lower than the previous incremental cost. When incremental costs increase rather than decrease, the buyer may have a basis for negotiating a price improvement with a supplier. QDA also supports buyer and seller discussions concerning a supplier’s processes. Suppliers may provide sound explanations concerning why incremental costs identified during QDA behave the way they do. Or, the supplier may realize that it does not have a reasonable explanation and adjust its pricing schedule accordingly. QDA is powerful because it provides a way to evaluate supplier quotations quantitatively. Even today, many items are still quoted using quantity discounts. The first part of the case requires calculation of price breaks at specific quantities: Q u o t e d U n i t Q u a n t i t y P r i c e 1 $23 2 $19 5 $17 10 $13 13 $12 Assignment: 1. Using the format illustrated in Chapter 12, calculate a quantity discount analysis for a quotation
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This note was uploaded on 04/21/2011 for the course MGT 01 taught by Professor Gad during the Spring '11 term at Tanta University.

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Quantity Discount Analysis Answers - Case Discussion:...

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