Question: QUESTION 2 (a) Abacus Sdn Bhd is a major distributor of organic fitness supplements in Kuala Lumpur. As shown in the table below, Abacus offers

QUESTION 2 (a) Abacus Sdn Bhd is a major

QUESTION 2 (a) Abacus Sdn Bhd is a major distributor of organic fitness supplements in Kuala Lumpur. As shown in the table below, Abacus offers a quantity discount for retailers in Cyberjaya, where your store is located. Given that the setup cost for your store is RM205 per order, annual demand is 4800 units, and annual inventory carrying charge as a percent of the cost. I, is 29%. PRICE RANGE QUANTITY ORDERED PRICE PER UNIT Initial Price 0 to 249 RM90 Discount Price 1 250 to 999 RM85 Discount Price 2 1,000 and over above RM83 1) What order quantity will enable you to minimise the total inventory cost? [4 Marks] (11) What is the total inventory cost for the order quantity in (1) above? [3 Marks] (111) What is the total inventory cost at the price break quantity for discount price 2? [3 Marks] (iv) Explain why it is unnecessary to include product cost (price or price times quantity) in the EOQ model, but the quantity discount model requires this information. [3 Marks]

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