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EOQ with dis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › EOQ with dis

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 9, 2020 at 2:29 pm #573294
    Janeline
    Member
    • Topics: 11
    • Replies: 8
    • ☆

    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??

    June 9, 2020 at 3:47 pm #573300
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    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.

  • Author
    Posts
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