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Inventory Control (part c) Quantity Discounts Example 3
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i understand that the TOTAL cost per ANNUM is cheaper at 5,000 units, however when i first did it i chose 10,000 units because the cost per unit is cheaper at that amount…… at 10,000 its 99.73 while at 5,000 its 199.27.
You are dividing by the wrong number of units! You should have divided the total cost p.a. by the total units per year. Over the year we are buying the same number of units in all cases.
sigh…cant believe i made that error!!
Is it possible for me to save the video after loading it?
Sorry, but no. It is the only way that we can keep this website free of charge.
Is it possible after loading the video to save it and viewing it later? internet connection is not good sometimes, thank you
great lecture! I am understanding things i have never understood before.
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.
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
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?
No. If the holding cost is given as a fixed amount per unit then you assume that it does not change.
Thanks much!
I don’t understand 23.22 can some help me plz.
@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!
@johnmoffat, Thanks a lot god bless u.
@hussain87, You are welcome
thank you so glad I found this website!
@balcune1, me too.
@theodora118, mee three
i seriously dont know where you got the 99% and 98.5% from please help me out
@desie86, The 99% and 98.5% represent the price /unit less the discount at the different level of quantity that might be ordered
download ot notes
exuse me from which book it’s examples are from ?
@alyy, It says at the top of this page – the lectures are all based on the Course Notes that are downloadable from this website!
I really enjoy this lecture, it was very helpful specially with the little tricks we may have on the exam. Thanks much
really great lecture resources opentuition! thank you so much
very well explained! thanks a lot
thank you for the valuable information
pls labour cost lecture
good job!!!
gr8, tnx
excellent i was stuck for a whole afternoon
this was really helpful
tnx
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