Discount-Mart (see Problem 16.8), as part of its new Lean program, has signed a long-term contract with Specialty Lighting and w
ill place orders electronically for its halogen lamps. Ordering costs will drop to $.50 per order, but Discount Mart also reassessed its carrying costs and raised them to $20 per lamp.
a) What is the new economic order quantity?
b) How many orders will now be placed?
c) What is the total annual cost of managing the inventory with this policy?
a) What is the new economic order quantity?
b) How many orders will now be placed?
c) What is the total annual cost of managing the inventory with this policy?
1 answer:
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Solution :
a). Interest for the simple interest
= $ 100
Amount due for the simple interest = $ 1000 + $ 100
= $ 1100
Amount due for the compound interest
= $ 1102.50
Interest for the compound interest = $ 1102.50 - $ 1000
= $ 102.50
b). Interest for the simple interest
= $ 450
Amount due for the simple interest = $ 1500 + $ 450
= $ 1950
Amount due for the compound interest
= $ 2007.34
Interest for the compound interest = $ 2007.34 - $ 1500
= $ 507.34
c). Interest for the simple interest
= $ 100000
Amount due for the simple interest = $ 10000 + $ 10000
= $ 20000
Amount due for the compound interest
= $ 25937.42
Interest for the compound interest = $ 25937.42 - $ 10000
= $ 15937.42
d). Interest for the simple interest
= $ 56,2500
Amount due for the simple interest = $ 25000 + $ 56,250
= $ 81,250
Amount due for the compound interest
= $ 203,426.54
Interest for the compound interest = $ 203,426.54 - $ 25,000
= $ 178,426.54
e). Interest for the simple interest
= $ 191,000
Amount due for the simple interest = $ 47,750 + $ 191,000
= $ 238,750
Amount due for the compound interest
= $ 1,830,620.40
Interest for the compound interest = $ 1,830,620.40 - $ 47,750
= $ 1,782,870.40