Inventory problem (5 points)

Sales units

Inventory units

Fixed $ cost per order

Carrying cost, $ per unit

Explanation:

Discounts (5 points)

Calculate cost of giving up discounts, and whether to take/reject the discount for the

following data:

Cost of financing

Terms of credit

Cash If paid

Suppliers discount within... net

1 1.00%

2 2.00%

3 1.00%

4 2.00%

5

1.00%

15%

Explanation:

10

5

13,000.00

250.00

800.00

13.00

a. Current ordering costs:

b. Current carrying cost:

c. Optimal ordering quantity (EOQ):

d) Saving in total inventory costs:

10

10

10

40

50

60

Cost of giving

up discount

40

50

Financing Decision