Assignment:
Oppong Corporation expects to sell 6,000 miniature home encapsulators this year. The cost of placing an order from its supplier is $235. Each unit costs $50 and carrying costs are 40 percent of the purchase price.
a. What is the economic order quantity? Economic order quantity = _______
b. What are total costs-order costs plus carrying costs-of inventory over the course of the year? Total costs = $ _______
c. Suppose now that the supplier offers a 2 percent discount on orders of 1.200 units or more. By how much is the purchase cost reduced and the inventory costs increased? Purchase cost reduced by = $ _______ Inventory costs have increased by = $ _______
d. In part c, should Oppong Corporation accept the supplier's offer? The firm should (select one) this offer as the reduction in purchase cost is (select one) than the increase in its inventory costs.