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Venus Industries consumes 20,000 units p.a. of a particular component. The supplier has offered the following pricing based on order size: Order Quantity (no of
Venus Industries consumes 20,000 units p.a. of a particular component. The supplier has offered the following pricing based on order size:
Order Quantity (no of units per order) | Cost per unit (Rs) |
---|---|
500 - 999 | 148 |
1,000 1,999 | 146 |
2,000 4,999 | 143 |
5,000 or More | 142 |
For each order, the freight + delivery cost incurred is Rs 3,500, and administrative + documentation cost is Rs 500. Venus has estimated the carrying cost of inventory at Rs 50 per unit per annum. What is the best option for Venus to minimize its total cost?
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