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John Moffat.
John Moffat.-
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aydinabasov
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Please help!
The annual demand for an item of inventory is 45 units. The item costs $200 a unit to purchase, the
holding cost for 1 unit for 1 year is 15% of the unit cost and ordering costs are $300 an order.
The supplier offers a 3% discount for orders of 60 units or more, and a discount of 5% for orders of 90
units or more.Why discounts applied for 45 units?? In question there are discounts terms for 60 and 90 units.
Thanks in advance!
John Moffat
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If they order 60 (or more) units each time then they will get a discount of 3% regardless of how many they order in total over the year. Similarly, if each order is for 90 (or more) they will get a 5% discount however many they order in total during the year.
Here they needing 45 units a year and so it is a strange question that they should consider ordering 60 units each time, but it is possible. I am wondering if you have copied the annual demand figure correctly – if it is a question in the BPP Revision Kit then please tell me which one.
Have you watched my free lectures on this? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
aydinabasov
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