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Total inventory cost = (Demand X Cost of inventory per unit) + TVC*
I have a tiny doubt in calculating total inventory cost, which is if the cost of inventory per unit is not given in the problem then what is the formula for it to find out?
Thank you.
What you have written is not correct!
The total inventory holding cost per year is the average inventory x cost of holding one unit of inventory for one year.
The average inventory is the order quantity divided by 2.I have absolutely no idea what you mean by TVC* – it is certainly not a standard term that will be used in the exam!!!
You really should watch the free lectures on inventory control for Paper F2, because this is revision of Paper F2.
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