1A) S&W purchases on average 2,000 Internet enabled cycling machines from a supplier every year and each bike is valued at $5,000. The internal cost (administration) of placing an individual order has been estimated at $50 plus there is a delivery cost of $1,000 per order. The annual carrying cost for S&W has been estimated at 40%.

The Economic Order Quantity is calculated as follows; EOQ 2DS / C . Comment upon the assumptions made within this formula and then apply it to calculate the optimum

1b) If the actual order quantity used increases by 10%, what will be the %age change in Total Stocking Cost? Total Stocking Cost (TSC) = QC/2 + DS/Q

Explain why the two percentage changes are different

order quantity from this supplier