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.

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%.

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?

@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!

naucelime says

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

ernamag says

great lecture! I am understanding things i have never understood before.

aubreychipungu 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.

John Moffat says

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

shajnush says

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

John Moffat says

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.

shajnush says

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

John Moffat says

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%.

tdcc 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?

John Moffat says

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

tdcc says

Thanks much!

hussain87 says

I don’t understand 23.22 can some help me plz.

John Moffat says

@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!

hussain87 says

@johnmoffat, Thanks a lot god bless u.

John Moffat says

@hussain87, You are welcome

balcune1 says

thank you so glad I found this website! 😀

theodora118 says

@balcune1, me too.

ai1989 says

@theodora118, mee three

desie86 says

i seriously dont know where you got the 99% and 98.5% from please help me out

jeanmarc says

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

wiky1100 says

download ot notes

alyy says

exuse me from which book it’s examples are from ?

John Moffat says

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

ychang80 says

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

pepperoniii says

really great lecture resources opentuition! thank you so much

kina says

very well explained! thanks a lot

startlet says

thank you for the valuable information

olofins says

pls labour cost lecture

herbiby says

good job!!!

Fahim Farooq says

gr8, tnx

eunicegachunga says

excellent i was stuck for a whole afternoon

nyoka says

this was really helpful

iraklixxxxx says

tnx

Subhan Paul 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