A company has annual demand for its product of 800,000 units. Each unit costs $10. Ordering costs are $400 per order and the annual holding cost per unit is $0.85.A 0.65% discount is available on all orders of at least 15,000 units and a 0.75% discount for orders of at least 35,000 units. Required:- Calculate the optimum order level to reduce total inventory costs

A company has annual demand for its product of 800,000 units. Each unit costs $10. Ordering costs are $400 per order and the annual holding cost per unit is $0.85.A 0.65% discount is available on all orders of at least 15,000 units and a 0.75% discount for orders of at least 35,000 units. Required:- Calculate the optimum order level to reduce total inventory costs

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 2CE: Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An...

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Question

A company has annual demand for its product of 800,000 units. Each
unit costs $10. Ordering costs are $400 per order and the annual holding
cost per unit is $0.85.A 0.65% discount is available on all orders of at
least 15,000 units and a 0.75% discount for orders of at least 35,000
units.
Required:-
Calculate the optimum order level to reduce total inventory costs

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