Question 17

W Ltd is a retailer of beer barrels. The company has an annual demand of 36,750 barrels. The barrels cost GHS12 each. Fresh suppliers can be obtained immediately, but ordering costs and the cost of carriage inwards are GHS200 per order. The annual cost of holding one barrel in stock is estimated to be GHS1.20.

The suppliers introduce a quantity discount of 2% on orders of at least 5,000 barrels and 2.5% on orders of at least 7,500 barrels.

Required

Determine the most economical order quantity W Ltd should place