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WZY processing company uses 2,400 units of a product per year on a continuous basis. The product carrying costs are RM60 per year and ordering costs are RM252.05 per order. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in inventory.
Question (a) Calculate the economic order quantity.
Question (b) Calculate the total cost per year to order and carry this item.
Question (c) If WZY company increases its order quantity by 58 units it will get a discount.
i). Calculate the total cost at new level
ii). How much is the discount that the supplier will offer WZY company to result in a net benefit to the company.
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