Minimum Order Quantity Policy

Hi Everyone!
I look forward to being a contributor to these forums.

I run two companies.
The first company is a medium sized wholesale food ingredient supplier to manufacturers
The other is also a small wholesale food ingredient company but sells small sizes and mostly to mom and pop shops/practitioners/startups.

My partner and I are having a debate on what our minimum order quantity should be for the medium sized company.

My partner believes the minimum order quantity should be set at 25 kilograms.
The rationale being:

• More profit
• No repackaging since 25kgs is our standard pack size
• Less likelyhood of contaminating ingredients by packing into smaller packs

Now, at the moment, we do accept smaller orders but we charge a "repacking fee". Some orders that are so small, say 1kg, are sent to our retail company.

Now, I thinking we should set it at 5kgs.

• Sometimes our customers don't need 25kgs
• One of our major competitors has their minimum set to 5kgs

Another issue is with credit terms. My partner thinks when a client is buying LESS than 25kgs, they should not be able to use their credit terms. They should pre-pay for the item. I'm not sure I like that idea. I would venture to say, that we could go as low as 5kgs and if a customer needed like 1kg, we could refer them to our other company which is always prepaid (and the prices higher).

Either way, they are paying a higher price per kilogram if the amount is small.

I hope this all makes sense. I'm just trying to create a solid minimum order quantity rationale and policy without turning away business but without creating wasted labor.

Thanks!!