13. A purchase manager has decided to place an order for a minimum quantity of500 units ofa particular item of inventory in order to get a discount of 10%. Past records reveal that last year 8 orders ( each of 200 units) were placed. Given the ordering cost= Rs 500 per order, inventory carrying cost= 40% of the inventory value, and price of the item= Rs 400 per unit, is the manager justified in his decision?

What is the effect of his decision to the company? (M Com, Delhi, 1995)