Reference no: EM132507304
Fiber Technology, Inc., manufactures glass fibers used in the communications industry. The company's materials and parts manager is currently revising the inventory policy for XL-20, one of the chemicals used in the production process. The chemical is purchased in 10-pound canisters for $109 each. The firm uses 7,000 canisters per year. The controller estimates that it costs $164 to place and receive a typical order of XL-20. The annual cost of storing XL-20 is $5.40 per canister.
Required:
Question 1: a table showing the total annual cost of ordering and storing XL-20 for each of the following order quantities: 500, 700, and 1,000 canisters.
Order size
500. 700. 1000
Number of orders. ______, ______, ______
Ordering cost. ______, ______, ______
Average Inventory. ______, _______, _______
Holding costs ______, _______, _______
total annual costs. ______, _______, _______
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