Answer to Question #350421 in Management for gulnigor

Question

4. A company manufactures a special product which requires a component ‘Alpha’. The following particulars are collected for the year 2021.

Annual demand of ‘Alpha’ is 12,000 units.

Cost of placing an order $ 1200 per order.

Inventory carrying cost 21% per annum.

Cost of ‘Alpha’ is $ 550.

The company has been offered a quantity discount of 6% on the purchase of ‘Alpha’ provided the order size is 6000 components at a time.

a. Compute the EOQ.

b. Advice whether the quantity discount offer can be accepted.

5. A company manufactures steel boxes for that it needs steel to calculate the quantity required EOD needs to be calculated.

Taking below Assumptions:-

Ordering Cost = $120 per order

Annual quantity demanded = 8400 units

Holding cost = $2.5 per unit

In the below-given figure, we have shown the calculation of the EOQ for a manufacturing company.