Morrissette Ltd. sells 240,000 units a year. Its carrying costs are $0.10 per unit and its ordering costs are $187.50 per order.
Required:
a. Calculate the economic order quantity.
b. The supplier has offered a $0.02 discount per unit (on all units) if the order size is 80,000 units. Should Morrissette increase its order size?

Question

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The Answer of Morrissette Ltd. sells 240,000 units a year. Its carrying costs are $0.10 per unit and its ordering costs are $187.50 per order.
Required:
a. Calculate the economic order quantity.
b. The supplier has offered a $0.02 discount per unit (on all units) if the order size is 80,000 units. Should Morrissette increase its order size?