Question
Rico Enterprises CC uses the economic order quantity model to establish the reoder quantity for raw material Y. the company holds no buffer inventory. information
Rico Enterprises CC uses the economic order quantity model to establish the reoder quantity for raw material Y. the company holds no buffer inventory. information relating to raw material Y is as follows: annual usage is set at 48 000 units, purchase price $80 per unit, ordering costs $ 120 per order. an annual holding cost is caculated at 10% of the purchase price. the manager recently entered into discussion with the sole supplier of raw material Y and the supplier offered a discount of 5% on the purchase price in each order placed is for 2000 units. REQUIRED: calculate, 1. the EOQ for raw material Y before the discussions. 2. the total annual cost of purchasing raw material Y as it is now 3. the total savings, if any , to Rico Enterprises CC when the accept the offer 4. list one example of holding costs
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