Quantity Discount Evaluator

This Quantity Discount Evaluator is based on a common financial decision model that helps people decide whether to accept a discount offered due to ordering larger quantities. Enter the data under Input and then click Calculate. The results are then displayed. Use this decision support tool to test different sets of assumptions and to see results change.

   Alternative 1 Alternative 2
Annual Quantity
$   EOQ $ $
Cost per Order $ Order Quantity $ $
Holding Cost
per year per unit
$ Number of Orders $ $
  Alternative 1 Alternative 2 Average Inventory $ $
Unit Price $ $ Ordering Costs $ $
Minimum Order
$ $ Storage Costs $ $
Purchasing Costs $ $
 Total Costs $ $

Average Inventory - This value is the average amount of inventory in storage. It assumes that usage is a constant rate and that new inventory comes when the old inventory is totally used.

EOQ - EOQ (Economic Order Quantity) is the ideal number of units to buy at one purchase. This minimizes the sum of the costs to purchase the goods. It also depends on the annual usage.

Holding Cost - Holding Cost is the cost to hold one unit for one year in inventory.

See the JavaScript for this decision aid.

copyright (c) 2000-2001 by D. J. Power