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Suppose that the annual demand for a componet is aproximately60,000 units. The company ordes...

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Accounting

Suppose that the annual demand for a componet is aproximately60,000 units. The company ordes the component from a supplier whohas offered the following quantity discount shedule.

order Quantity Price per unit

0-999 $30

1,000-1,999 $29

2,000-3,999                                            $28

4,000-or more                                          $27

If the company's carrying charges is 15 percent of the item'sprice and the cost per order is $150, determine yhe order quantitythat would minimize the total related inventory cost for thiscomponent.

Answer & Explanation Solved by verified expert
4.1 Ratings (578 Votes)
Demand D 60000 units QuantityQ PriceP 0999 30 10001999 29 20003999 28 4000or more 27 Carrying cost 15 Cost per order 150 Calculating EOQ Validity of order quantity with context    See Answer
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In: AccountingSuppose that the annual demand for a componet is aproximately60,000 units. The company ordes the...Suppose that the annual demand for a componet is aproximately60,000 units. The company ordes the component from a supplier whohas offered the following quantity discount shedule.order Quantity Price per unit0-999 $301,000-1,999 $292,000-3,999                                            $284,000-or more                                          $27If the company's carrying charges is 15 percent of the item'sprice and the cost per order is $150, determine yhe order quantitythat would minimize the total related inventory cost for thiscomponent.

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