In the quantity discount model in Example 13.2, the minimum total annual cost is region 3 is clearly the best. Evidently, the larger unit purchase costs in the other two regions make these two regions...

In the quantity discount model in Example 13.2, the minimum total annual cost is region 3 is clearly the best. Evidently, the larger unit purchase costs in the other two regions make these two regions unattractive. When would a switch take place? To answer this question, change the model slightly. First, change the fixed cost of ordering to $40. Second, keep the unit cost in region 3 at $26, but change the unit costs in regions 1 and 2 to $26+2k and $26+ k, where you can let k vary. (Currently, k is $2.) Use a two-way SolverTable, with k varied over some appropriate range to see how small k must be before it is optimal to order from region 1 or 2. What region is the optimal ordering quantity in if there is no price break at all (k = 0). How do you reconcile this with your SolverTable findings?

Example 13.2

Example 13.2