Halwings Group Limited wishes to achieve excellent stock
management so as to achieve a marvelous profit this year. Its
management estimates the demand for its products to be 1000 units
per annum, with a purchase price of shs.10 per unit, a holding cost
of shs.0.75 per unit and ordering cot of shs.15 per order. The
supplier of the stocks has presented Halwings Group Limited with
the following range of prices of the stocks:
Quantity Price Per
Order size (in units) Discount Unit (Shs)
(%)
0 – 99 0 10
100 – 199 1 9.90
200 – 399 2 9.80
400 – 599 4 9.60
600 – 799 5 9.50
800 – 899 5 9.50
900 – 999 5.5 9.45
Due to its storage capacity, the company can only purchase an
amount of up to 600 units. Currently, the company is purchasing at
optimum stock quantity to enable it achieve its objectives. The
management is considering whether to shift from the current stock
purchase policy to purchase the maximum stocks.
Required;
a) Calculate the current EOQ in units.
(5 Marks)
b) Determine the total costs of stocks that arise due to the EOQ
purchased (include the discount opportunity costs).
(5 Marks)
c) Advise the company whether it should change its policy.
(5
Marks)
- Question One Halwings Group Limited Wishes To Achieve Excellent Stock Management So As To Achieve A Marvelous Profit Thi 1 (91.85 KiB) Viewed 49 times