Compute the annual total cost

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ABC Aircraft uses 3,000 drill bits annually. Each drill bit costs $50 and each order ABC places costs $25. The annual carrying rate is 40% of unit cost. ABC has contracted with the supplier of the drill bits to use an order quantity of 200 by doing which they receive a 3% discount on purchase price.

Compute the annual total cost (i.e. the Purchase cost + Ordering cost + Holding cost). (Please read the question more than once)

Reference no: EM1390794

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