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professor190 [17]
4 years ago
13

Meena Distributors has an annual demand for an airport metal detector of 14001400 units. The cost of a typical detector to Meena

is ​$400.00400.00. Carrying cost is estimated to be 2020​% of the unit​ cost, and the ordering cost is ​$25.0025.00 per order. If Purushottama Meena​, the​ owner, orders in quantities of 300300 or​ more, he can get a 55​% discount on the cost of the detectors. Should Meena take the quantity​ discount? What is the EOQ without the​ discount?
Business
1 answer:
Ksivusya [100]4 years ago
6 0

Answer: The answer is EOQ = 591.61 unit.

Explanation:EoQ =

√2DS/H

Where

D= demand in unit

S = ordering cost

H= Holding Cost

Demand =1,400

× 400 = 560,000 per year

Order Cost $25

Holding Cost = 20% of unit cost

20/100× 400 = $80 per item per year

√2DS/H

√2×560,000×25/80

√28,000,000/80

=√350,000

= 591.61

EOQ = 591.61 unit

If the owner orders 300 or more

300×400

=120,000

The discount will be

55/100×120,000

=66,000

120,000 - 66,000

=54,000

He should take the discount

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