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Sir as for total cost it is
Ordering cost + holding cost on the quantity ordered each timeFor EOQ Total cost
Total cost formula will be the same but quantity will be replaced with EOQ quantity.
For above cases purchase price will be ignored.My question is when discount is offered.
how will be total cost calculated.obviously we will first look if our EOQ quantity is lower than discounted qty then need to calculate total cost.
WILL purchase price come into effect for both EOQ and discounted qty for total cost calculation?If there are quantity discounts then the purchase price is relevant when deciding whether or not the order quantity should be different from the EOQ.
I work through examples illustrating how we deal with this in my free lectures on the management of inventory.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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