Page 63 - DBP5043
P. 63
INVENTORY
DISCOUNTS QUANTITY:
Sometimes the supplier gives a discount to the company if order
is made in large quantities. In deciding whether to order the EOQ
level or at a quantity that allows discounts from suppliers,
companies should make decisions based on the excess profits of
the company.
ANALYSIS :
1.Calculate
EOQ
4. Make An 2. Calculate
Analysis TIC EOQ
3.Calculate
TIC SALES
Analysis
Annual saving= sales x (xx)discount………xx
Cost increase (TIC SALES -TIC EOQ )………….(xx)
+ve
Accept offer if positive analysis
