Operations Manager: EOQDISC

EOQ with Quantity Discounts (EOQDISC)

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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