Question: Saba Switchgears Pvt . Ltd . requires 2 , 0 0 0 units of power spring every year. The unit cost of this item is

Saba Switchgears Pvt. Ltd. requires 2,000 units of power spring every year. The unit cost of
this item is Rs.200. The holding cost per unit per year is 20 percent of unit cost. The ordering cost
is Rs.400 per order. The company is considering the following three procurement policies:
Policy I: Place four orders of equal size.
Policy II: Place an order for 1000 units each time, and avail a 10 percent discount on the price per
unit.
Policy III: Follow the EOQ concept.
Which is the best policy for Saba to implement?

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