Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Delta Products Ltd maintains an inventory of their top selling product to meet its annual demand for 81,600 units.. Each unit, costs $4.75 and
Delta Products Ltd maintains an inventory of their top selling product to meet its annual demand for 81,600 units.. Each unit, costs $4.75 and the order cost is $106.25 per order. Carrying costs have been identified as $1.50 per unit. Delta bases its ordering on the EOQ model. Recently their supplier has offered a 10% discount on the product if Delta orders on a quarterly basis. For the current situation calculate the following: a. Economic order quantity 1pt b. Number of orders per year 1pt c. Total annual cost of ordering and carrying inventory. 1pt d. Total annual cost of inventory including ordering and carrying costs. 2pt For the proposed discount calculate the following: e. New order quantity 1pt f. New average inventory 1pt g. Total annual cost of inventory, ordering and carrying cost. 2pt h. Should Delta take the discount and change their inventory ordering and carrying policy? Why or why not? 3pts
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started