Exercise 20.6 (Algorithmic) Ordering and Carrying Costs Ottis, Inc., uses 683,400 plastic housing units each year...
Exercise 20.6 (Algorithmic)
Ordering and Carrying Costs
Ottis, Inc., uses 683,400 plastic housing units each year in its production of paper shredders. The cost of placing an order is $33. The cost of holding one unit of inventory for one year is $12. Currently, Ottis places 170 orders of 4,020 plastic housing units per year.
Required:
1. Compute the annual ordering cost.
$
2. Compute the annual carrying cost.
$
3. Compute the cost of Ottis’s current inventory policy.
$
Is this the minimum cost?
- Select your answer -YesNo
Homework Answers
| Annual ordering cost = (683400/4020)*33 |
| Annual ordering cost = 170*33 |
| Annual ordering cost = $ 5,610/. |
| Annual carrying cost = (4020/2)*12 |
| Annual carrying cost = $ 24,120/. |
| Total cost of Ottis’s current inventory policy = (5610+24120) |
| Total cost of Ottis’s current inventory policy = $ 29,730/. |
| This is the minimum cost, Yes |
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Exercise 20.6 (Algorithmic)
Ordering and Carrying Costs
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