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15 February, 02:30

Abey Kuruvilla, of Parkside Plumbing, uses 1 comma 200 of a certain spare part that costs $24 for each order, with an annual holding cost of $24. a) Calculate the total cost for order sizes of 25, 40, 50, 60, and 100 (round your responses to two decimal places).

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  1. 15 February, 02:38
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    The total cost is $345,600 at each order size.

    Explanation:

    Given that,

    Annual holding cost = $24

    Fixed cost each order = $24

    Units demand per year = 1,200

    (a) At order size of 25,

    Total inventory cost:

    = Annual holding cost * Fixed cost each order * (Order quantity : 2) * (Units demand per year : Order quantity)

    = $24 * $24 * (25 : 2) * (1,200 : 25)

    = $345,600

    (b) At order size of 40,

    Total inventory cost:

    = Annual holding cost * Fixed cost each order * (Order quantity : 2) * (Units demand per year : Order quantity)

    = $24 * $24 * (40 : 2) * (1,200 : 40)

    = $345,600

    (c) At order size of 50,

    Total inventory cost:

    = Annual holding cost * Fixed cost each order * (Order quantity : 2) * (Units demand per year : Order quantity)

    = $24 * $24 * (50 : 2) * (1,200 : 50)

    = $345,600

    (d) At order size of 60,

    Total inventory cost:

    = Annual holding cost * Fixed cost each order * (Order quantity : 2) * (Units demand per year : Order quantity)

    = $24 * $24 * (60 : 2) * (1,200 : 60)

    = $345,600

    (e) At order size of 100,

    Total inventory cost:

    = Annual holding cost * Fixed cost each order * (Order quantity : 2) * (Units demand per year : Order quantity)

    = $24 * $24 * (100 : 2) * (1,200 : 100)

    = $345,600
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