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What is the annual holding cost

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Reference no: EM132649970

IT has been considering the prospect of stocking a new type of clothes.

They have done some research on this item's cost and demand characteristics and have determined the following.

Cost/unit: $15

Demand: 75 units/month

Cost to place order: $400/order

Inventory-holding cost: $8/unit-year

Selling price/unit: $20

Currently their ordering policy is to order 150 clothes every two months. (Not the EOQ policy)

1) How many times per year will IT order under this policy?

2) What is the annual holding cost?

3) What is the annual setup cost?

4) What is the annual profit?

Here is the consider adopting the EOQ policy

1) What is the EOQ?

2) How many times per year will IT order under an EOQ policy?

3)What is the annual holding cost?

4) What is the annual setup cost?

Reference no: EM132649970

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