a range of bicycles and holds an inventory of certain bicycle parts. Part number 1258 costs P8.00 per unit. GC expects to use 8,000 units of part 1258 per year. Ordering costs have bee
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GC manufactured a range of bicycles and holds an inventory of certain bicycle parts. Part
number 1258 costs P8.00 per unit. GC expects to use 8,000 units of part 1258 per year.
Ordering costs have been calculated at P150 per order and nventory holding costs have been
estimated at P2.75 per unit per year. The supplier of part number1258 has offered a 2%
discount off the purchase price if each order is for 2,000 units or more.
Required:
a. Calculate the economic order quantity for 1258, assuming no discount is given.
b. State whether GC should accept the discount offered. (show your workings).
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