A shopkeeper has a uniform demand of an item at
the rate of 50 items per month. He buys from a
supplier at a cost of Rs.6/- per item and the cost of
ordering is Rs. 10/- per order. If the stock holding
costs are 20% of stock value, how frequently
should he replenish his stock? Suppose the
supplier offers 5% discount on orders between 200
and 999 items and a 10% discount on orders
exceeding or equal to 1000 units. Can the
shopkeeper reduce his costs by taking advantage
of either of these discounts?
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ans is easy600000000 but I don't know that I was right or wrong
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Answer:
The frequency that he should replenish his stocks is months The Optimal Order Quantity is units
Given:
We are given demand rate items/year
Ordering or set up cost
Holding cost per item
To find: Economic ordering quantity
Method:
Economic ordering quantity units
Cycle time
months
months
Therefore the frequency that he should replenish his stocks is months The Optimal Order Quantity is units
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