A company uses components at the rate of 15,000 units per year, which are bought in at a cost of $3.90 each from the supplier. The company orders 8,000 units each time it places an order and the average inventory held is 500 units. It costs $30 each time to place an order, regardless of the quantity ordered. The total holding cost is 21% per annum of the average inventory held. Required:- Calculate the total holding cost and total ordering cost?
A company uses components at the rate of 15,000 units per year, which are bought in at a cost of $3.90 each from the supplier. The company orders 8,000 units each time it places an order and the average inventory held is 500 units. It costs $30 each time to place an order, regardless of the quantity ordered. The total holding cost is 21% per annum of the average inventory held. Required:- Calculate the total holding cost and total ordering cost?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 2CE: Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An...
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A company uses components at the rate of 15,000 units per year, which
are bought in at a cost of $3.90 each from the supplier. The company
orders 8,000 units each time it places an order and the average
inventory held is 500 units. It costs $30 each time to place an order,
regardless of the quantity ordered.
The total holding cost is 21% per annum of the average inventory held.
Required:-
Calculate the total holding cost and total ordering cost?
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