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Elis [28]
2 years ago
8

Compute the total annualized inventory holding and ordering costs when the cost per order (S) is $75, the annual demand (D) is 1

20,000, the annual carrying charge (i) is 25%, the order quantity (Q) is 1200, and the item’s cost is $50
Business
1 answer:
mihalych1998 [28]2 years ago
7 0

Answer:

total annualized inventory holding and ordering costs = $15,000

Explanation:

total number of orders per year = 120,000 units / 1,200 units per order = 100 orders per year

total ordering cost per year = cost per order x number of orders per year = 100 orders per year x $75 per order = $7,500

average inventory = 1,200 units / 2 = 600 units

annualized inventory holding costs = 600 units x 25% holding cost x $50 cost per unit = $7,500

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