Exe E. Limited has received an offer of quantity discounts on its order of materials as under: The annual requirement for the material is 5,000 tonnes. The ordering cost per order is Rs 1,200 and the...

Exe E. Limited has received an offer of quantity discounts on its order of materials as under:

The annual requirement for the material is 5,000 tonnes. The ordering cost per order is Rs 1,200 and the stock holding cost is estimated at 20 per cent of material cost per annum. The purchase quantity options to be considered are: 400 tonnes, 500 tonnes, 1,000 tonnes, 2,000 tonnes and 3,000 tonnes. You are required to compute the most economical purchase level. What will be your answer to the above question, if there are no discounts offered and the price per ton is Rs 1,500.