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Question - The business total annual demand is 100 000 logs of wood from Vryheid Kwazulu-Natal. A log of wood is purchased for costs R3,00. Nekoachemo Ltd raise a loan at a 12% interest rate per annum to finance logs inventory. The variable costs are R25 to place an order of logs and that the other variable annual holding costs (excluding interest) is R1,10 for each log of wood.
Required - Calculate total actual material costs, including total ordering and total carrying costs for the 2021 at EOQ.
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