1. ## Strip Averages (2000)

I buy a commodity on a monthly basis based on a published price for that month. For example, I need to buy 58, 68, 86, 68, and 48 widgets for the months of November-March, respectively. Currently, the prices for those months are \$9.35, \$10.90, \$11.53, \$11.62, and \$11.35, respectively. The simple average of those prices is \$10.95. I have been advised to put in a "good till cancelled" order for 50% of my requirements for those months at a strip average of \$10.50. That is, when the strip average (simple) averages \$10.50, my supplier will sell and ship me 50% of each of the month's requirements. What I would like to compute is how much of a decrease in each month's price must take place to reach the \$10.50 average. Any ideas?

2. ## Re: Strip Averages (2000)

Perhaps I am looking at it too simply but isn't the decrease just:

=(10.95-10.5)/10.95 = 4.11%

Steve

3. ## Re: Strip Averages (2000)

Nope, Steve, you are spot on! Thanks (brain disfunction here)!

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