Example 62(a). A manufacturing firm purchases 2000 units of a particular item per year at a unit cost of Rs 80. The ordering cost per order is Rs 50 and the inventory carrying cost is 25% of the value of the average inventory. Find the optimum order quantity and the minimum total cost. If the supplier offers a 5% discount for purchases in lots of 1000, should the offer be accepted?
Example 62(a). A manufacturing firm purchases 2000 units of a particular item per year at a unit cost of Rs 80. The ordering cost per order is Rs 50 and the inventory carrying cost is 25% of the value of the average inventory. Find the optimum order quantity and the minimum total cost. If the supplier offers a 5% discount for purchases in lots of 1000, should the offer be accepted?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter23: Other Topics In Working Capital Management
Section: Chapter Questions
Problem 8MC
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![Example 62(a). A manufacturing firm purchases 2000 units of a particular item
per year at a unit cost of Rs 80. The ordering cost per order is Rs 50 and the
inventory carrying cost is 25% of the value of the average inventory. Find the
optimum order quantity and the minimum total cost, If the supplier offers a 5%
discount for purchases in lots of 1000, should the offer be accepted?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F565f42a8-d6c2-4a62-ad68-823fc0cdd000%2Fc64710d1-ceb9-4401-8c3b-59c9ffc5fd28%2Fzq7kf8a_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Example 62(a). A manufacturing firm purchases 2000 units of a particular item
per year at a unit cost of Rs 80. The ordering cost per order is Rs 50 and the
inventory carrying cost is 25% of the value of the average inventory. Find the
optimum order quantity and the minimum total cost, If the supplier offers a 5%
discount for purchases in lots of 1000, should the offer be accepted?
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