Quantity discounts:
A) Make buyers order more than is economical.
B) Decrease the annual carrying costs but increase the ordering cos.
C) Can be a good decision if the total annual costs are reduced.
D) Always advantage the seller at a cost to the buyer.
E) Persuade the buyer to buy more often.

Question

Quizplus · Accepted Answer

Quantity discounts can be beneficial if the total annual costs are reduced because it encourages buyers to order more at one time, which can reduce the ordering costs (such as shipping or processing fees) and potentially lower the unit cost of the item. However, if the discount causes the buyer to order significantly more than they need, it can lead to increased carrying costs (such as storage or inventory management) that may outweigh the benefits of the discount. Ultimately, it depends on the specific situation and the balance between ordering and carrying costs.

Quantity Discounts