A company has annual demand for its product of 100,000 units. Each unit costs 3.00. Ordering costs are 110 per order and the annual holding cost per unit is 2.

Required:

(i) Using the above information calculate the EOQ. Show your workings.

(ii) Using the above information, determine if the optimum ordering quantity would change if the supplier offered a discount of 2% as long as at least 8,000 units were ordered each time. Show your workings.

(iii) Recommend if the company should increase the number of units ordered