A firm estimated that it uses 50,000 of a particular type of material in the production. The cost of placing an order is $100 and holding cost $0.4 per unit.
The supplier has offered a quantity discount of $0.02 per unit if the company buys batches of $100,000 units, should the company take advantage of this?
Demand rate, D
Ordering/Setup cost, S
Holding cost, H
Unit Price, P
Optimal Order Quantity, Q* Economic Order Quantity Model 50000
0.4 (fixed amount) 5000 EOQ (b).
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Oct 14, 2020EXPERT
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