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Receivables, payables and inventory

Forums › Ask CIMA Tutor Forums › Ask CIMA F1 Tutor Forums › Receivables, payables and inventory

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • September 15, 2020 at 11:46 am #585729
    saiyini
    Member
    • Topics: 9
    • Replies: 7
    • ☆

    Create Co requires 20,000 units of a certain component every year. The purchase price per unit is $40 and it costs $64 to place and receive delivery of an order irrespective of its size. Create co’s cost of capital is 10% per annum.Creat co currently places orders for 800 units, although a discount scheme for larger orders exist which works as follows

    Minimum order quantity Discount rate
    1000 1%
    4000 2%
    8000 3%

    What size of order should create co place if its aim is to minimize costs?

    800 units
    1000 units
    4000 units
    8000 units

    Please can you help me with the steps needed for this ?

    September 23, 2020 at 8:31 pm #586493
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7142
    • ☆☆☆☆☆

    Hi,

    You need to use the economic order quantity formula. Try it and see where you get to.

    Thanks

  • Author
    Posts
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