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A Merchant sells 40000 hammers each year and demand for the product is even throughout the year . the cost of ordering the hammers is $20 per order and the cost of holding one hammer for a year is $ 4. the merchant orders the hammers in batches of 1000 and retain a buffer inventory of 2000 hammers throughout the year.
WHAT IS THE COMBINED ANNUAL COST OF ORDERING AND HOLDING THE HAMMERS?
$……………
PLZZ somebody tell ” the merchant orders the hammers in batches of 1000 ” is this EOQ?
THE COMBINED ANNUAL COST OF ORDERING AND HOLDING THE HAMMERS IS 10530 OR 10800? PLZZ ANSWER THIS QUESTION.
Holding cost is 10,000
[(100/2)+2000] x $4Ordering cost is 800
(40,000/1000) x €20Total cost is 10800
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where did this 100 come from ?? pls explain
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