Homework SourseThe purchasing manager for Alpa Enterprises requested the fo
The purchasing manager for Alpa Enterprises requested the following data from the accounting department:
Annual demand = 15,500; Cost of placing an order = £180; Annual inventory holding costs = 20 percent; Unit cost = £753
Suppose Alpha has been arbitrarily ordering 50 times per year. What is the total annual inventory cost?
The purchasing manager for Alpa Enterprises requested the following data from the accounting department:
Annual demand = 15,500; Cost of placing an order = £180; Annual inventory holding costs = 20 percent; Unit cost = £753
Suppose Alpha has been arbitrarily ordering 50 times per year. What is the total annual inventory cost?
The purchasing manager for Alpa Enterprises requested the following data from the accounting department:
Annual demand = 15,500; Cost of placing an order = £180; Annual inventory holding costs = 20 percent; Unit cost = £753
Suppose Alpha has been arbitrarily ordering 50 times per year. What is the total annual inventory cost?
Solution
Annual Demand is 15,500 @ £753 thus total invenrory value would be 15500 x 753 = £11671500 and 50 orders were placed which must have cost 50 x £180 =£ 9000.
Average annual holding cost would be 20% of $ 11671500 / 2 = £ 1167150.
Total annual inventory cost = £ 12847650
