What is the optimal order quantity and why

Assignment Help Accounting Basics
Reference no: EM133128335

Question - Candyland Ltd. is the main supplier of fruit candies to customers. The company currently makes 72,000,000 packs of candies annually which uses fruit nectar. Each candy uses 0.0003 kilograms of fruit nectar which is used evenly during the period. Candyland sells one pack of candy for $360 each which includes a mark-up of 20%. The company currently makes nine equal orders which are made instantaneously.

The main supplier of the fruit nectar has indicated to our management team that bulk discounts are being offered. A 4% discount will be given for orders 600 kilograms above the current order size, a 7.5% discount for orders of 1,200 kilograms above the current lot size, 10% discount if the current order size is doubled. No discounts are given for orders less than the current lot size.

Usually, it takes $250 per hour to place an order and each other takes on average 3 hours. The holding cost per unit is $4 plus an opportunity cost of 2% of the current cost of making one pack of candy. The current purchase price of the fruit nectar is 60% of the cost to make one pack of candy.

Required -

Calculate the Economic Order Quantity (EOQ).

Calculate the total cost based on the EOQ.

Calculate the total cost for each individual alternate order quantities, including the current policy.

What is the optimal order quantity and why?

Reference no: EM133128335

Questions Cloud

Gains in health insurance coverage : What would explain why moral hazard MIGHT NOT occur after the large gains in health insurance coverage?
What type of diversification does samsung pursue : What makes Samsung a conglomerate? What type of diversification does Samsung pursue? Identify possible factors such as core competencies,
What is spotify mission-vision statement : Spotify is a global, online music streaming, podcasting, and video service launched in 2008 in Stockholm, Sweden. The service allows users to browse music in a
Brands and brand equity and brand positioning : Based on the readings of HBR Coursepack "Brands and Brand Equity AND Brand Positioning".
What is the optimal order quantity and why : Usually, it takes $250 per hour to place an order and each other takes on average 3 hours. What is the optimal order quantity and why
Did the end of legal segregation in the 1960s end racism : 1. Did the end of legal segregation in the 1960s end racism or bring true equality? Explain.
Social cost-benefit analysis for option x : Imagine it is 2013 and you are working for the Civil Service at the time when the UK government is considering a range of policy options to address the financia
Comic Strip or Political Cartoon Analysis Assignment : Comic Strip or Political Cartoon Analysis Assignment - Which techniques does the creator of the political cartoons use? How does the author make his/her point
Animal restraint lab activity : Scarlet is a 3-year-old female Pomeranian. The owners came to your clinic for a consult regarding her aggressiveness to other people, especially during vet visi

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd