ABC company uses 8,000 pens every year. For each pen, cach order cost is $30 and the annual holdingcost is 10 per cent of unit cost. The unit cost depends on the quantity ordered as follows:Quantity1-199Unit Cost (S)20200-49918500-79916800+12> Assume that demand has a constant rate and do not stockout;a) What is the optimal order size?b) Determine the yearly order quantity

The question is based on the concept of Economic Order Quantity. Economic order quantity or Optimal…

ABC company uses 8,000 pens every year. For each pen, cach order cost is $30 and the annual holding cost is 10 per cent of unit cost. The unit cost depends on the quantity ordered as follows: Quantity Unit Cost (S) 20 1-199 200-499 18 500-799 16 800+ 12 > Assume that demand has a constant rate and do not stockout; a) What is the optimal order size? b) Determine the yearly order quantity

ABC company uses 8,000 pens every year. For each pen, cach order cost is $30 and the annual holding cost is 10 per cent of unit cost. The unit cost depends on the quantity ordered as follows: Quantity Unit Cost (S) 20 1-199 200-499 18 500-799 16 800+ 12 > Assume that demand has a constant rate and do not stockout; a) What is the optimal order size? b) Determine the yearly order quantity

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 19P

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