- This topic has 1 reply, 2 voices, and was last updated 9 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
BC Co. sells widgets and expects annual demand of 3.4m units. The cost of making
an order is $49.71 and the cost of holding one unit for one year is $0.50.
What is the total ordering costs per yearThe solution(explanation) was not given since it was an MCQ. The answer however is $6,500.54. How did they arrive at this answer? Please help
You need to calculate the EOQ using the formula on the formula sheet, and this comes to 26,000 units.
Therefore they will need to place 3.4M/26,000 = 130.77 orders a year on average.
Therefore the total ordering costs = 130.77 x 49.71 = $6,500 p.a.
I really do suggest that you watch our free lectures on inventory control.
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.