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January 29, 2021 at 5:32 pm
Hi All, A note from my side: ordering costs are treated here as variable costs depending on a number of orders, while I do think they are rather semi-fixed or stepped fixed costs. I mean: if I send a package of 500 units and I was doing so far one inspection of two samples beforehand – and that inspection costed me 100 dollars per order, I don’t think that an inspection of just two samples per order would be enough to secure sufficient quality of goods in case of an order of, say, 3,000 units. Therefore both a number of samples during an inspection and a whole cost of such an inspection per order should rise => hence the cost of ordering calculated as per the equation in the video would not present true picture of ordering costs.
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