Question

The Trektronics store begins each week with 360 phasers in stock. This stock is depleted each week and reordered. The carrying cost per phaser is $31 per year and the fixed order cost is $69.
What is the current total carrying cost?
What is the current restocking cost?

Answer 1

Answer:

$5,580 and $3,588

Explanation:

The computation is shown below:

Total Carrying costs is

= Average inventory × the carrying cost per phaser

= (360 phasers ÷ 2) × 31

= $5,580

And,

The Restocking cost is

= Number of orders × the fixed order cost

= 52 × 69

= $3,588

The 52 is the total weeks in a year

We simply applied the above formula