Marantz Inc. produces various AV devices with a wide assortment of different models for its customers. One item, AV3100 is very popular. Keen of keeping its stock under control, a decision is taken to order only the optimum economic quantity, for this item, each time. You have the following information.
|
Annual demand (units) |
48,600 |
|
Purchase price per unit |
$ 250 |
|
Carrying/Holding costs per unit |
$ 6 |
|
Cost per order |
$ 200 |
Required:
- Determine the EOQ using the equation method.
- Fill in the blanks in the following table using the above data.
|
No. of orders |
1 |
10 |
20 |
30 |
90 |
120 |
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Order size |
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Average stock |
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Carrying (Holding) costs |
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Order costs |
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Total costs |
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- Calculate the holding, ordering cost & their total cost at the EOQ level.
- Plot the graph at the EOQ level showing the numbers
- Marantz Inc. has been offered a 3 per cent discount on the cost if it places orders in quantities of 18,200. Discuss whether the company should accept the discount and place larger orders, show your workings.
