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 Annual demand for window frames is 10000.Each frame costs Rs. 200 and ordering cost is Rs. 300 per order. Inventory holding cost is Rs. 40 per frame per year. The supplier is willing to offer 2% discount if the order quantity is 1000 or more, and 4% if order quantity is 2000 or more. If the total cost is to be minimized, the retailer should
[2010]
  • a)
    order 200 frames every time
  • b)
    accept 2% discount
  • c)
    accept 4% discount
  • d)
    order Economic Order Quantity
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
Annual demand for window frames is 10000.Each frame costs Rs. 200 and ...
= Rs.196150
Since total cost is minimum at Q = 2000 Therefore 4% discount can be accepted.
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Most Upvoted Answer
Annual demand for window frames is 10000.Each frame costs Rs. 200 and ...
= Rs.196150
Since total cost is minimum at Q = 2000 Therefore 4% discount can be accepted.
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Annual demand for window frames is 10000.Each frame costs Rs. 200 and ordering cost is Rs. 300 per order. Inventory holding cost is Rs. 40 per frame per year. The supplier is willing to offer 2% discount if the order quantity is 1000 or more, and 4% if order quantity is 2000 or more. If the total cost is to be minimized, the retailer should[2010]a)order 200 frames every timeb)accept 2% discountc)accept 4% discountd)order Economic Order QuantityCorrect answer is option 'C'. Can you explain this answer?
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