Calculate the order quantity. When should Metaverse LLP place the orde
Metaverse LLP is a laptop manufacturing company located at Bengaluru, India. One of the main components of the laptop is the Hard Disk Drive (HDD). The inventory of this item is controlled by the EOQ model. Presently the company imports 40 GB HDD from Micron Components and Devices at a unit price of $60 and a 15 day delivery time. Metaverse needs to determine the amount to order each time an order is placed. They also need to determine when to place the order. The
However, Micron wants to drastically increase prices of HDDs which is not acceptable to Metaverse. The purchase officer of Metaverse has identified another supplier Minnesota Data Products. This supplier is willing to supply at the same price as Mircon. Further the new supplier is willing to provide a discount of 8% for an order quantity of 350 units.
Based on the above data,
a) Calculate the order quantity. When should Metaverse LLP place the order?
b) Should Metaverse accept the discount offer from Minnesota Data Products? Since Metaverse will be purchasing HDDs from the new supplier for the first time, what measures should be taken to ensure that the HDDs supplied are meeting Metaverse’s quality standards?
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