Question
Company A specializes in selling soy candles. The company has established a policy of reordering inventory every 18 days (assume 360 days a year). The
Company A specializes in selling soy candles. The company has established a policy of reordering inventory every 18 days (assume 360 days a year). The company currently considers adopting EOQ model in its inventory management. If the following constitute the relevant data, what is the current total inventory cost (TIC)? How does the current TIC compare with the TIC under the optimal policy with EOQ model?
please answer the above question with values from the below question.
Company XYZ purchases 50,000 boxes of staples every year. Ordering costs are $50 per order, carrying costs are 5% of the inventory value, and the price is of $1.00 per box. The vendor now offers a quantity discount of 1% per box if the company buys pens in order sizes of 20,000 boxes. Should the company accept the quantity discount? Show your calculations to justify your decision.
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