Calculate total annual inventory cost.

Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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  1. Calculate total annual inventory cost. 
IGOT7 Store purchases shirts printed with GOT7 name and logo from a vendor. The
vendor sells the shirts to the store for RM40 each. The cost to the store for placing an
order is RM110, and the annual carrying cost is 20% of the cost of the shirt. Jackson, the
store manager, estimates that 1,600 shirts will be sold during the year. The vendor has
offered the store the following volume discount in Table 2.
Order Size
1 - 299
300 - 500
501 and more
Table 2: Discount schedule
Discount
0%
2%
4%
Cost/Price
RM40.00
RM39.20
RM38.40
Transcribed Image Text:IGOT7 Store purchases shirts printed with GOT7 name and logo from a vendor. The vendor sells the shirts to the store for RM40 each. The cost to the store for placing an order is RM110, and the annual carrying cost is 20% of the cost of the shirt. Jackson, the store manager, estimates that 1,600 shirts will be sold during the year. The vendor has offered the store the following volume discount in Table 2. Order Size 1 - 299 300 - 500 501 and more Table 2: Discount schedule Discount 0% 2% 4% Cost/Price RM40.00 RM39.20 RM38.40
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