A company has annual credit sales of 10 million, and a cost of capital of 7%. At present the company's debtors take on average 45 days to pay for goods bought on credit. The company is considering a discount scheme which it estimates would reduce the period taken by customers to 25 days. Based on the limited information above, what would be the net effect of the proposed discount scheme on the company's profit and loss in a given year? Assume 360 days in a year.

Saving of 38,889

Saving of 48,611

Saving of 1,000

Saving of 555,556

A company operates an EOQ policy. It has annual demand of 120,000 units and a fixed order cost of 50. Its EOQ level is 5,000 units.

Assuming no safety stock, zero lead time, and all assumptions of the EOQ are met, what is the carrying cost per unit per annum for this company's inventory?

		0.48
		0.24
		1,200
		2.08