a company purchases 5,000 units per quarter at an even rate throughout the year. Each order placed with the supplier incurs a delivery charge of $20. The annual cost of holding one unit is $5.
What is the minimum total of the inventory cost (order costs plus holding costs) per year?
working breakdown please with explanation
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can't solve this question
11y ago#1Have you watched the free lecture on Inventory?
For the minimum total, you calculate the EOQ using the formula. In this case, D = 20,000; Co = $20; and Ch = $5.
When you have the EOQ then you can calculate the inventory costs in exactly the same way as in the free lecture.
(You ask for an explanation - there is a full explanation in the lecture, and I cannot type out the whole lecture here :-) )
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