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- June 9, 2020 at 2:29 pm #573294
BB manufactures a range of electronic products. The supplier of component Y has informed
BB that it will offer a quantity discount of 1% if BB places an order of 10,000 components or
more at any one time.
Details of component Y are as follows:
Cost per component before discount RM2
Annual purchases 150,000 components
Ordering costs RM360 per order
Holding costs RM3 per component per annum
Required:
(a) Calculate the total annual cost of holding and ordering inventory of component Y using
the economic order quantity and ignoring the quantity discount.
(b) Calculate whether there is a financial benefit to BB from increasing the order size to
10,000 components in order to qualify for the 1% quantity discount.Answer:a)Holding:9000,ordering 9000
B)holding 15000,ordering 5400Can i know how to calculate this ans??
June 9, 2020 at 3:47 pm #573300I work through a similar example in my free lectures on inventory and show exactly how to do it.
Please watch the lectures – they are a complete free course for Paper MA and cover everything needed to be able to pass the exam well. - AuthorPosts
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