Answer:
1. Meena should take the quantity discount since with such discount the EOQ will rise by just 1 unit from 20.5units to 21.5 units and a net gain of $49.18.
2. The EOQ without discount will be 20.5 units
Explanation:
EOQ=Square root of ((2xordering cost x demand)/ (Carrying cost))
Gains of accepting discount will be
i. ordering cost savings= (demand/quantity order) x ordering cost
= (660/360)*23=$42.16
ii. Price saving per item=0.18 x 660 =$118.80
total gain =$160.96
iii. Stockholding cost =300 x (23 x 0.91 ) x 0.18=$1,130.22
iv. Additional cost incurred by increasing order= 1,130.22-(300 x 23 x0.18)
=$111.78
Net gain= 160.96-111.78
= $49.18
Answer:
a. 3,900
Explanation:
We find the probability of healthy persons & the weak out of the total population in the town.
Probability of healthy persons
P(h) = 600/1000
P(h) = 0.6
Probability of weak persons
P(w) = 400/1000
P(w) = 0.4
We find the pay off for both the healthy and the weak, then add up to get the expected value or the minimal annual premium
Expected Value = 0.6*$500 + 0.4*$9000
Expected Value = $300 + $9000
Expected Value = $3,900
So, the annual premium must be at least $3,900.
A Mortgage
A bank issues mortgage with interest typically over a long time for people to buy a house of constructing stuff.
Answer:
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