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dear sir/madam,
i would like you to please help me understand why we are comparing ,if may say apples and bananas, in your second video on EOQ which is on bulk discounts.if you will check the first total cost is summed on EOQ units, while the second two comparisons are done on the given figures, which 1000 units and 5000 units.is it fair to compare costs in this manner?Hi,
When we calculate the EOQ we are ignoring any bulk discounts. Using this EOQ figure we can then work out the total cost. In looking at bulk purchases of 1,000 units or 5,000 units,as given in the question, then we can see if it is beneficial to order 1,000 units in bulk or 5,000 units in bulk, with the cheaper total cost being the most beneficial.
Hope this helps.
Thanks
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