Essentials Of Cost Accounting For Health Care Organizations 3rd Edition by Steven Finkler, David Ward,Judith Baker

تمرين 1

The Zerox Hospital purchases 200,000 reams of copy paper each year at a price of $2.50 per ream. Zerox' cost of carrying inventory is 6% per annum. Other costs related to storing paper come to $.10 per ream of paper per year. Each order requires $30 of clerical time and $135 of shipping costs.
a) What is the economic order quantity?
b) If the vendor will only deliver in multiples of 1,000 reams of paper, how many reams should you order each time to have the minimum inventory cost? Support your answer.
c) Suppose the vendor offers a discount of.05% (.0005) if it orders 25,000 reams at a time. Should Zerox accept the offer? Why or why not? Show your work