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JJane6y ago
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 5400 Can i know how to calculate this ans??
John MoffatJohn MoffatTutor6y ago#1
I 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.
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