the annual demand for the material is 2 000 kg stock holding costs are 20 of materia 616407
A firm is able to obtain quantity discounts on its orders of material as follows:
|
Price per kg |
|
|
kg |
|
|
8.00 |
less than 250 |
|
7.90 |
250 and less than 500 |
|
7.80 |
500 and less than 1,000 |
|
7.60 |
1,000 and less than 2,000 |
|
7.50 |
2,000 and above |
The annual demand for the material is 2,000 kg. Stock holding costs are 20% of material cost per annum. The delivery cost per order is Rs. 8.
You are required to calculate the best quantity to order.