p$.$m$.,$ February $9,2025$

$1.$ A retailer sells a popular electronic gadget. The weekly demand for the gadget,

which costs $$250$ per unit follows a consistent pattern, averaging $500$ units per

week. The retailer incurs an ordering cost that is $3\%$ of the item cost per order, and

the annual holding cost is $15\%$ of the item cost per unit. The retailer operates $52$

weeks per year.

A supplier has offered a quantity discount of $5\%$ per unit if the retailer orders at

least $4,500$ units per order.

Required:

a$)$ Calculate the Economic Order Quantity $($EOQ$).$

b$)$ Compare the total annual cost of purchasing at the EOQ versus purchasing

$4,500$ units per order with the discount.

c$)$ Advise whether the retailer should accept the quantity discount

d$)$ State Two assumptions of the EOQ model

$2.$ A company expects to make payments of $$8,000,000$ per year. The