The annual demand of manufacturing component

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Reference no: EM132138729

The annual demand of a manufacturing component used in company InterSupport Services is 22,000 units. The cost of the component is $89 and holding costs (which includes storage, insurance, and cost of capital) are 37.5% of the unit cost. Each time an order is placed the company expects to incur costs, such as administrative and receiving, of $240. The supplier lead time is 10 days and the company operates with even production 365 days a year. Calculate the total annual cost (TAC) for this component based on the EOQ calculation (TAC = total purchase, holding and order costs). Before calculating total order cost, round the number of orders up to the closest whole number.

Reference no: EM132138729

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