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EOQ with price break
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This lesson throws light on economic order quantity with price break.

Harshit Aggarwal
Cleared UPSC ESE twice with Rank 63 and 90 in mechanical engg. Got 99 percentile in GATE. Cracked ONGC, BHEL,ISRO, SAIL, GAIL successfully

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discount of 5% is only applied to purchasing cost or all 3 of them ?? or only purchasing cost and holding cost??
  1. COURSE : NDUSTR AL ENGINEERING LESSON: EOQ WITH PRICE BREAK


  2. ABOUT ME Graduated from NIT Nagpur in 2008 Cleared Engineering Services Examination (ESE-UPSC) Exam & Got the offer letter from most of the Maharatna and Navratna Companies * Cleared GATE Exam Rate, Review, Recommend, Share Follow me on Unacademy at: https://unacademy.in/user/harsh.t aggarwal


  3. MODEL 2-EOQ WITH PRICE BREAK Under certain conditions, discounts are offered on unit purchase price for large quantity purchase and these discounts take the form of price breaks Here the discount is on purchasing cost we include it along with ordering and holding cost. Tstal 2. Totel Cost = Riochsse Cost t Oderi Cos++ Holday Cost


  4. QUESTION Demand 2400 units/year Unit Cost Rs 6 /unit 5% discount is given if order size is 500 Ordering Cost Co - Rs 32/order Holding Cost CH-16% of unit cost CH-.96 Is it advisable to accept the discount ?


  5. SOLUTION 96 Rs 14784- ordes is 7500 5% Soo 2. Discount is aduisable


  6. QUESTION Expected Annual Sales 8,000 units D 8,000 units/year Ordering Cost Co Rs 1800/year Holding Cost 10% of inventory value ltems can be purchased as LOT SIZE I-999 1000-1499 1500-1999 2000 and above UNIT PRICE (Rs) 220 200 190 185


  7. SOLUTION Next Pice, C2oo s featible Eoa 2so X. (185x.) Llach is not tible as unit Poice 2 2 Azsan, Not feasible.


  8. SOLUTION (Sod 2-


  9. THANK YOU