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Determine ordering and carrying costs under current policy

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Reference no: EM132595527

Ryujin Company buys 500 boxes of item A-1 every two months. Order costs are 380 per order; carrying costs are 1 per unit, and vary directly with inventory investment. Currently the company purchases the item for 5 each.

REQUIRED:

Question 1: Determine the ordering and carrying costs under current policy.

Question 2: Determine the economic order quantity and the related ordering and carrying costs.

Question 3: What is the order-size decision Peter should make, if the supplier gives a 5% discount for order sizes of 3,000 units?

Reference no: EM132595527

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