# Inventory Control (part c) Quantity Discounts Example 3

1. says

Is it possible after loading the video to save it and viewing it later? internet connection is not good sometimes, thank you

2. says

Wait a minute!! did he just say the best level is 5,000 each time (at the end of the video)??? I thought it just have to be 10,000 units each time (as proved from the calculations, it offers optimal cost). Great lecture it is.

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Yes – that is what I did say, because the answer is 5,000!

Check again (or look at the answer at the back of our Course Notes). The total cost at 5000 is lower than the total cost at 10000

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sir how did i get the discount 98 and 99 percent please… can elaborate for me please

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The question says that the discounts are 1% and 2%.
If the discount is 1% then it means the cost is 99% of what it was originally.

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sir sorry to pain you..that exactly my question if discount 1% how did u get the result cost 99% i mean how you calculate please

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If there is a discount of 1%, then it means they pay 1% less than the normal price. 1% less means they pay 99% of the price. 2% less means they only pay 98%.

3. says

if the holding cost is a fixed cost of say \$2,50 per unit and not a percentage of the purchase cost as in this example should the discount still be applied to the fixed holding cost?

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No. If the holding cost is given as a fixed amount per unit then you assume that it does not change.

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Thanks much!

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@hussain87, If you order 10,000 each time then the average inventory is 5,000 units.
There is a 1.5% discount on the purchase price and so the purchase price is \$25 – (1.5% x \$25). Or….98.5% x \$25.
The holding cost is 10% of the purchase price.

(Did you watch the earlier part of the lecture? The same problem occurred (and was explained) for the previous order quantity!

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@johnmoffat, Thanks a lot god bless u.

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@desie86, The 99% and 98.5% represent the price /unit less the discount at the different level of quantity that might be ordered

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@alyy, It says at the top of this page – the lectures are all based on the Course Notes that are downloadable from this website!

4. says

I really enjoy this lecture, it was very helpful specially with the little tricks we may have on the exam. Thanks much

5. says

thank you! inventory cost was the problem, i didnt knew one had to charge discount in holding cost per unit as well in calculating total holding cost