Respuesta :
Answer:
Option A. $348.29
Explanation:
Here we can find the total inventory cost by using the following formula:
Total inventory cost = Total Ordering Cost (Step1) + Total Holding Cost (Step2)............... Equation 1
Now here,
Step 1.
Total ordering cost = Number of Orders * Ordering cost per order
The information provided in the question is as under:
Ordering cost per order is $15
Total Order quantity is 70 gallon per order
Weekly demand = 30 gallons
Which means that the Annual demand = 30 Weekly demand * 52 weeks
Annual demand = 1560 Gallons
Hence the Number of orders = annual demand/order quantity = 1560/70
= 22.2857
By putting the values, we have:
Total ordering cost = 22.2857 Number of orders * $15 per order = $334.29
Step 2.
Total Holding cost = Ordering Quantity / 2 * Holding cost
Price Per Unit is $2 per gallon
Holding cost per unit per year = 20% of Price Per Unit
Holding cost per unit per year = $2 * 20% = $0.4 per Unit per year
Ordering Quantity is 70 gallons per order
By putting the values, we have:
Total Inventory Holding Cost = (70 Orders / 2) * $0.4 = $14
Now putting values in the equation 1, we have:
Total inventory cost = $334.29 + $14 = $348.29
Hence the option A is correct.