MaWood Limited uses the economic order quantity (EOQ) model to establish the re order quantity for raw material Y. The company holds no buffer stock. Information relating to raw material Y is as follows:

Annual Usage 48,000 units

Purchase Price GHc 80 per unit

Ordering Costs GHc 120 per order

Annual holding costs 10% of the purchase price

You are required to calculate:

Economic Order Quantity (EOQ) for material Y

The total annual cost for purchasing, ordering and holding stocks of material Y

The supplier has offered Awo Woods Limited a discount of 1 per cent on the purchase price if each order placed is for 2000 units

c. Calculate the total annual saving to Awo Limited of accepting this offer.