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In material costs while calculating EOQ where discounts are given if orders are made above a certain level, will the holding cost and ordering costs change by this percentage too or is it the purchase price only that will be affected by the discount?
You really should watch the free lectures on inventory control, because this is all explained with examples there.
(Our lectures are a complete free course for Paper F2 and cover everything needed to pass the exam well.)Ordering costs will not change as a result of a discount – there is no reason at all why they should.
With regard to holding costs, if it is given in the question as a % of purchase price, then if the purchase price is lower then so to will be the holding cost. If it is given as a figure in $’s, then you would assume that it then does not change if there is a discount.
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