O Dadam Berhad. is a company selling home camera. It sells the camera for RM120 which...

 

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O Dadam Berhad. is a company selling home camera. It sells the camera for RM120 which costs RM55 each. Last year the company sold 150,000 units. The supplier of the camera which recently announced a price increase of RM6. This will force Dadam Berhad to increase the selling price to RM125 but anticipate that the demand for the camera for this coming year to decline by 15 percent. It costs Dadam Berhad RM300 to place an order and the carrying costs of the deluxe telephone are 15% of costs. The supplier has also indicated that due to increase in processing costs, it will accept orders only in round lots of 100 units at the quoted price of RM45. An additional charge of RM30 per order is made on any fractional order. Required: i. Compute the economic order quantity (EOQ). (1 Mark) ii. Compute the total costs of inventory if the EOQ is ordered. (3 Marks) iii. Compute the total costs of inventory if each order is rounded to the nearest round lot of 100 units. (3 Marks) iv. What order size should the company place? (1 Mark) (Total: 18 Marks) O Dadam Berhad. is a company selling home camera. It sells the camera for RM120 which costs RM55 each. Last year the company sold 150,000 units. The supplier of the camera which recently announced a price increase of RM6. This will force Dadam Berhad to increase the selling price to RM125 but anticipate that the demand for the camera for this coming year to decline by 15 percent. It costs Dadam Berhad RM300 to place an order and the carrying costs of the deluxe telephone are 15% of costs. The supplier has also indicated that due to increase in processing costs, it will accept orders only in round lots of 100 units at the quoted price of RM45. An additional charge of RM30 per order is made on any fractional order. Required: i. Compute the economic order quantity (EOQ). (1 Mark) ii. Compute the total costs of inventory if the EOQ is ordered. (3 Marks) iii. Compute the total costs of inventory if each order is rounded to the nearest round lot of 100 units. (3 Marks) iv. What order size should the company place? (1 Mark) (Total: 18 Marks)

Answer rating: 100% (QA)

i Compute the economic order quantity EOQ EOQ 2DSH Where D annual demand 150000 units S cost o... View the full answer