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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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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5. 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. Order Quantity Below 100 units Unit Cost RM 40 RM 38 RM 37.20 Discount None 100 units and below 200 units 200 units and more 5% 7% a) What would be the optimal order quantity? b) What is the minimum annual inventory cost?
Transcribed Image Text:5. 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. Order Quantity Below 100 units Unit Cost RM 40 RM 38 RM 37.20 Discount None 100 units and below 200 units 200 units and more 5% 7% a) What would be the optimal order quantity? b) What is the minimum annual inventory cost?
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