Answer:
$1.5
Explanation:
Given:
Charges per order = $30
Charges per case = $50
1 case = 5 bags of fertilizers
Number of fertilizers bags needed per year = 2000 bags
Annual holding cost, C₀ = 30%
Now,
Annual demand for cases, D =
=
= 400 cases
thus,
Annual unit holding cost per case, = 30% of $50 i.e $15
Thus,
Economic Order quantity ( EOQ ) =
on substituting the respective values, we get
EOQ =
or
EOQ = 40
Now,
Annual ordering cost = Ordering cost × Number of orders
= C₀ ×
= $30 ×
= $300
Annual inventory holding cost
= Annual unit inventory holding cost × Average inventory
= ×
= $15 ×
= $300
Now,
Sum of annual ordering and holding cost per case of fertilizer
= $300 + $300
= $600
Therefore,
Annual ordering and holding cost per case of fertiliser
=
=
= $1.5