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- This topic has 3 replies, 2 voices, and was last updated 4 years ago by
John Moffat.
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- December 4, 2020 at 3:07 am #597576
Hi sir,
I have doubt in this part d) with discount why in holding cost ch*Q/2 why they didn’t did discount here. They only apply discount in purchase cost why ?? Usually we do discount in purchasing cost and holding cost. Can you please explain e why they didn’t did discount in holding cost. I see in most qstns they didn’t did discount in holding cost. But I see your lectures in that eg 3) have discount in both holding and purchasing. I am very confused now can you please explain me the reason. Thank you in advance.
December 4, 2020 at 7:54 am #597599If the holding cost is given in $’s as it is in FLG, then it stays at the same cost whether or not there is a discount.
If, on the other hand, the holding cost is given as a % of purchase price (as in my lecture example) then if the purchase price is lower because of the discount then the holding cost is automatically lower as well.
December 4, 2020 at 8:13 am #597607Oh I see. Thank you so much sir I understand your explanation. Thanks
December 4, 2020 at 1:56 pm #597633You are welcome 🙂
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