- June 9, 2020 at 2:29 pm
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
(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.
B)holding 15000,ordering 5400
Can i know how to calculate this ans??June 9, 2020 at 3:47 pm
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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