Jeddah Berhad uses 2,400 units of a product per year on a continuous basis. The product...
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Jeddah Berhad uses 2,400 units of a product per year on a continuous basis. The product carrying costs are RM60 per unit and ordering costs are RM250 per order. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in inventory. Required: a) Calculate the economic order quantity (round up to the nearest whole unit. (3 Marks) b) Calculate the total cost per year to order and carry this item. (4 Marks) c) Its supplier has notified Jeddah Berhad that if the firm increases its order quantity by 58 units, they will give it a discount. Calculate the discount in RM that the suppliers will have to give Jeddah Berhad to result in a net benefit to the company. (5 Marks) Jeddah Berhad uses 2,400 units of a product per year on a continuous basis. The product carrying costs are RM60 per unit and ordering costs are RM250 per order. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in inventory. Required: a) Calculate the economic order quantity (round up to the nearest whole unit. (3 Marks) b) Calculate the total cost per year to order and carry this item. (4 Marks) c) Its supplier has notified Jeddah Berhad that if the firm increases its order quantity by 58 units, they will give it a discount. Calculate the discount in RM that the suppliers will have to give Jeddah Berhad to result in a net benefit to the company. (5 Marks)
Expert Answer:
Answer rating: 100% (QA)
To solve this problem well use the Economic Order Quantity EOQ formula and related calculations a Calculate the economic order quantity EOQ EOQ 2 annu... View the full answer
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
Posted Date:
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