Question
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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Step: 1
To determine the best option for Venus Industries to minimize its total cost we need to calculate the total cost for each order quantity option and co...Get Instant Access with AI-Powered Solutions
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Managing Supply Chain and Operations An Integrative Approach
Authors: Thomas Foster, Scott E. Sampson, Cynthia Wallin, Scott W Webb
1st edition
132832402, 978-0132832403
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