Cesar Rego Computers, a Mississippi chain of computer hardware and software reta

Question

Cesar Rego Computers, a Mississippi chain of computer hardware and software retail outlets, supplies both educational and commercial customers with memory and storage devices. It currently faces the following ordering decision relating to purchases of disks 36,000 disks $26 $0.49 $0.89 $0.84 Purchase price Discount price aantty needed to qualify for the discount 6,100 disks What is the EOQ? EOO uts (and your response to the nearest whole number) Should the discount be taken? Since the total cost with discounted volume is should | the total cost at the EOQ volume. Cesar Rego the discount provided other factors such as storage space, etc. permits Enter your answer in the answer box

Explanation / Answer

So 1955 units

With discount

Total cost with Discount is Less than the total cost of at EOQ.

Should opt/Take the discount.

D Demand Total 36000 units Per year p Purchase cost 0.89 $ per unit K Ordering cost 26 $ per order h Holding cost 0.49 $ per unit per year Working days 250 week Q Order quantity 250 units EOQ (Sqrt(2*k*D/h) 1954.586 1955 units Ans AI Average inventory 977 units EOQ/2 (AI*h) Holding cost 478.8737 $ No of orders 18.41822 times Total orders/EOQ Toc Total ordering cost annualy 478.8737 $ Thc Annual Holding cost 478.8737 $ THOC 957.7474 (Toc+Thc) Tpc Purchasing cost annual 32040 $ TC Total cost 32998 $ (Toc+Thc+Tpc) Length of order cycle 13.57352 (Total days/No of orders) 14 days

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