5 5. HH trading company sells school bags and the annual demand is 2800 bags. It costs thecompany RM 33 to place an order and the carrying cost is 7% of the unit cost. The cost ofeach bag is RM 40. The supplier offers the following discounts to HH Company.Order QuantityBelow 100 unitsUnit CostRM 40RM 38RM 37.20DiscountNone100 units and below 200 units200 units and more5%7%a) What would be the optimal order quantity?b) What is the minimum annual inventory cost?

Optimal order quantity is also written as EOQ or economic order quantity. It is the level of…

HH trading company sells school bags and the annual demand is 2800 bags. It costs the company RM 33 to place an order and the carrying cost is 7% of the unit cost. The cost of each bag is RM 40. The supplier offers the following discounts to HH Company. Unit Cost Order Quantity Discount None RM 40 Below 100 units 100 units and below 200 units 200 units and more 5% 7% RM 38 RM 37.20 a) What would be the optimal order quantity? b) What is the minimum annual inventory cost?

HH trading company sells school bags and the annual demand is 2800 bags. It costs the company RM 33 to place an order and the carrying cost is 7% of the unit cost. The cost of each bag is RM 40. The supplier offers the following discounts to HH Company. Unit Cost Order Quantity Discount None RM 40 Below 100 units 100 units and below 200 units 200 units and more 5% 7% RM 38 RM 37.20 a) What would be the optimal order quantity? b) What is the minimum annual inventory cost?

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 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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