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Annual Sales is 300,000 units. The carrying cost is 20% of the purchase price; The purchase price is RM25 per unit; The ordering cost is
Annual Sales is 300,000 units. The carrying cost is 20% of the purchase price; The purchase price is RM25 per unit; The ordering cost is RM1,500 per order; The desired safety stock level 8,000 units; The delivery time is 1 week (7days). i) If the ordering cost increased by 20%, what will happen to the level of EOQ? (Assume original sales level and carrying costs remain constant). What is the elasticity of EOQ with respect to ordering cost? (That is, the percentage change in EOQ divided by the percentage change in ordering cost). j) If the price increased by 40%, what will happen to EOQ? (Assume the original sales level and ordering cost remain constant). What is the elasticity of EOQ with respect to price? (That is, the percentage change in EOQ divided by the percentage change in price)
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