A. The expected demand for a regular component is 2000 units per year. The item can...

A. The expected demand for a regular component is 2000 units per year. The item can be purchased from Bonjo Limited. Their lists are shown in the table below. The ordering cost is $200 and the carrying cost per unit is 75%. The cost is $20.

BONJO LIMITED
QUANTITY	DISCOUNT
1 - 199	0%
200 - 499	2%
500 - more	5%

You have just been promoted as the operations manager for this firm. Advise the purchasing manager in making the following decisions.

i. What is the economic order quantity?

ii. If BONJO wants to consider quantity discount, what quantity should he order and why?

B. Over the past year Jojo Ltd had annual sales of 10, 000 detergent paste ‘KEY’. The average quarterly sales for past 5 years have averaged; ?1 = 4000, ?2 = 3000, ?3 = 2000, and ?4 = 1000. Find the seasonal index.

Expert Solution

Economic Order Quantity is the number of unit that is added to the inventory which minimize the total inventory cost. It maintain a balance between ordering costs and carrying costs.

keosha answered 4 months ago

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