A company uses 245,000 units of Material X each year, which costs Rs.500 foreach unit. The cost of placing an order is R
Posted: Sun Apr 17, 2022 7:06 pm
A company uses 245,000 units of Material X each year, which
costs Rs.500 foreach unit. The cost of placing an order is Rs.5,000
for each order. The annual cost of holding inventory each year is
10% of the purchase cost. The EOQ based on the above information is
7,000 units. The supplier offers a price discount of Rs. 5 per unit
for orders of 10,000 or more.
Required:
(a) Economic Order Quantity
(b) Total cost (Purchase price, ordering cost and holding cost)
costs Rs.500 foreach unit. The cost of placing an order is Rs.5,000
for each order. The annual cost of holding inventory each year is
10% of the purchase cost. The EOQ based on the above information is
7,000 units. The supplier offers a price discount of Rs. 5 per unit
for orders of 10,000 or more.
Required:
(a) Economic Order Quantity
(b) Total cost (Purchase price, ordering cost and holding cost)