A fresh food company in Oman is specialized in apples distribution in Oman . Annual sales forecast is 5400 boxes of apple . It costs OR 10 to make and receive an order and holding cost is OR 3.5 per box per year . The prices depend on quantities purchased such that the order quantities ( in boxes ) from 1 to 199 at a unit price RO 5 ; quantity 200 to 499 at a unit price 4.5 RO ; and quantity 500 and more at a per unit price of 4 RO . If the discount option is considered then the best order quantity that minimizes the total annual inventory cost is 1)199 2)200 3)176 4)None is correct 5)500
A fresh food company in Oman is specialized in apples distribution in Oman . Annual sales forecast is 5400 boxes of apple . It costs OR 10 to make and receive an order and holding cost is OR 3.5 per box per year . The prices depend on quantities purchased such that the order quantities ( in boxes ) from 1 to 199 at a unit price RO 5 ; quantity 200 to 499 at a unit price 4.5 RO ; and quantity 500 and more at a per unit price of 4 RO . If the discount option is considered then the best order quantity that minimizes the total annual inventory cost is 1)199 2)200 3)176 4)None is correct 5)500
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A fresh food company in Oman is specialized in apples distribution in Oman . Annual sales forecast is 5400 boxes of apple . It costs OR 10 to make and receive an order and holding cost is OR 3.5 per box per year . The prices depend on quantities purchased such that the order quantities ( in boxes ) from 1 to 199 at a unit price RO 5 ; quantity 200 to 499 at a unit price 4.5 RO ; and quantity 500 and more at a per unit price of 4 RO . If the discount option is considered then the best order quantity that minimizes the total annual inventory cost is
1)199
2)200
3)176
4)None is correct
5)500
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VIEWCalculation of Economic Order Quantity:
VIEW1) Calculation of Total Inventory Cost when EOQ is 199 units:
VIEW2) Calculation of Total Inventory Cost when EOQ is 200 units:
VIEW3)Calculation of Total Inventory Cost when EOQ is 176 units:
VIEW5)Calculation of Total Inventory Cost when EOQ is 500 units:
VIEWAnswer:
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