Stocky Ltd purchases raw materials from a supplier using the Economic Order Quantity

methodology having estimated the Cost for a unit of materials as $3$ pa of Ordering as $120$ per order and the annual holding cost per unit. The average stock holding is currently $1100$ units, and annual demand is for $8,000$ units. Each unit costs $125$ to purchase, and the supplier offers credit terms that require each order to be paid on The supplier has offered that if the order size the date that the next order is made.

terms for the duration e is set at $1400$ units, they will continue to offer credit of the order cycle. $1$ Working capital costs Stocky Ltd L $5\%$ pa to finance, and buffer stock levels are required to be maintained at current buffer levels. A

$)$ what is the current economic order quantity for Stocky Lid$7(2$ marks$)$

what is the current buffer stock levels in units? $(2$ marks$)$

what is the saving cost of moving to the $1400$ unit order size for Holding Costs

Order Coats Stock Funding Costs

D$)$ What is the benefit or cost

any given the supp

$(5$ marka$)$

Lin Trade Creditor funding costs of

moving to a $1400$ unit order alze, f

suppller credit terms offered? Given the answers to parts A D$,$ should Stocky take up the suppiller's offer? $(1$ mark$)$

Describe TWO mitations of the EOQ approach to stock management$(4$marks$)$