Marantz Inc. produces various AV devices with a wide assortment of different models for its customers. One item, AV3100 is very popular. Keen of keeping its stock under control, a decision is taken to order only the optimum economic quantity, for this item, each time. You have the following information.

Annual demand (units)	48,600
Purchase price per unit	$ 250
Carrying/Holding costs per unit	$ 6
Cost per order	$ 200

Required:

1. Determine the EOQ using the equation method. 
2. Fill in the blanks in the following table using the above data. 

 

No. of orders	1	10	20	30	90	120
Order size
Average stock
Carrying (Holding) costs
Order costs
Total costs

 

1. Calculate the holding, ordering cost & their total cost at the EOQ level. 
2. Plot the graph at the EOQ level showing the numbers 
3. Marantz Inc.  has been offered a 3 per cent discount on the cost if it places orders in quantities of 18,200. Discuss whether the company should accept the discount and place larger orders, show your workings.