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EOQ with Delayed Payment Example 1 0 . Company A buys a certain brand of mp 3 player periodically. Demand for this product is 2
EOQ with Delayed Payment
Example Company A buys a certain brand of mp player periodically. Demand for this product is units annually. The unit purchase cost is $ The fixed cost of ordering is $ per order, and the holding cost rate is yr Calculate EOQ. Consider that Company A made an agreement with its supplier that the payment can be done one year later than the purchase. Calculate the optimal order quantity in this case. Assume that the supplier of Company A want to have purchase orders of at least units. Then, how long the payment should be delayed in order to meet this target. Develop an allunits quantity discount scheme that is equivalent to delaying the payment for months.
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