A company that deals in groceries is planning to minimise its total annual costs for inventory....

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A company that deals in groceries is planning to minimise its total annual costs for inventory. The following relates to the company's planned purchasing arrangements for the forth coming year. Quantity required per annual Purchase cost per unit Ordering cost: Holding cost per unit per annum Required: a) Advise the management if the company should buy quantities using the Economic Order Quantity (EOQ) or order 640 units at a time in order to secure an 2% discount on purchase cost. (10marks) 12 800 units M50 M25 per unit 8% of purchase price A company that deals in groceries is planning to minimise its total annual costs for inventory. The following relates to the company's planned purchasing arrangements for the forth coming year. Quantity required per annual Purchase cost per unit Ordering cost: Holding cost per unit per annum Required: a) Advise the management if the company should buy quantities using the Economic Order Quantity (EOQ) or order 640 units at a time in order to secure an 2% discount on purchase cost. (10marks) 12 800 units M50 M25 per unit 8% of purchase price

Answer rating: 100% (QA)

To determine whether the company should use the Economic Order Quantity EOQ or order 640 units at a ... View the full answer