JP Limited manufacturers of a special product, follows the policy of EOQ for one of its components. The component’s details are as follows: The company has been offered a discount of 2 per cent on the...

JP Limited manufacturers of a special product, follows the policy of EOQ for one of its components. The component’s details are as follows:

The company has been offered a discount of 2 per cent on the price of the component provided the lot size is 2,000 components at a time. You are required to (i) compute the EOQ, (ii) advise whether the quantity discount offer can be accepted (assume that the inventory carrying cost does not vary according to discount policy) and (iii) would your advise differ if the company is offered 5 per cent discount on a single order?