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A shopkeeper estimates annual requirement of an itemas 2 0 0 0 units. He buys from supplier 1 0 per item andthe cost of ordering

A shopkeeper estimates annual requirement of an itemas 2000 units. He buys from supplier 10 per item andthe cost of ordering is 50 birr each time. If the stockholding costs are 25% per year of stock value howfrequently should replenish his stock? Further, supposethe supplier offer 10% discount on order between 400and 699 item, a 20% discount on order exceeding orequal to 700 can the shopkeeper reduce his cost bytaking advantages from either of the discount ?

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