Solution-Calculate total annual saving to point of

Calculate total annual saving to point of accepting offer

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Reference no: EM132717402

Point uses the economic order quantity (EOQ) model to establish the reorder quantity for raw material Y. The company holds no buffer inventory. Information relating to raw material Y is as follows:

Annual usage 48,000 units
Purchase price $80 per unit
Ordering costs $120 per order
Annual holding costs 10% of the purchase price

Required:

Problem 1 : Calculate

a. The EOQ for raw material Y is
b. The total annual cost of purchasing, ordering and holding inventory of raw material Y is:
c. The supplier has offered Point a discount of 1% on the purchase price if each order placed is for 2,000 units.

Problem 2 : Calculate the total annual saving to Point of accepting this offer.

Reference no: EM132717402

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Calculate total annual saving to point of accepting offer

Reference no: EM132717402

Reference no: EM132717402

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