Q21
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LM manufactures a range of bicycles and holds an inventory of certain bicycle parts.
Part number F564 costs LM $8.00 per unit. LM expects to use 12,000 units of part F564 per year and normally orders a month's supply at a time.
Ordering costs have been calculated at $150 per order, and inventory holding costs have been estimated at $5.75 per unit per year.
The supplier of part number F564 has offered:
A 1% discount off the purchase price if each order is for 1,500 units or more.
A 2% discount off the purchase price if each order is for 2,000 units or more.
Advise LM as to which of the following quantities of F564 is most cost-effective to order at any one time.
Select the correct area(s) on the image.
