Venus Industries consumes 20,000 units p.a. of a particular component. The supplier has offered the following pricing based on order size: Order Quantity(no of units per order)Cost per unit (Rs)500 - 9991481,000 – 1,9991462,000 – 4,9991435,000 or More142 For each order, the freight + delivery cost incurred is Rs 3,500, and administrative + documentation cost is Rs 500. Venus has estimated the carrying cost of inventory at Rs 50 per unit per annum. What is the best option for Venus to minimize its total cost?

Economic order quantity(EOQ) is the method of ordering the inventory from the suppliers by…

Answered: Venus Industries consumes 20,000 units…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Venus Industries consumes 20,000 units p.a. of a particular component. The supplier has offered the following pricing based on order size:

Order Quantity (no of units per order)	Cost per unit (Rs)
500 - 999	148
1,000 – 1,999	146
2,000 – 4,999	143
5,000 or More	142

For each order, the freight + delivery cost incurred is Rs 3,500, and administrative + documentation cost is Rs 500. Venus has estimated the carrying cost of inventory at Rs 50 per unit per annum. What is the best option for Venus to minimize its total cost?

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions