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What the total annual storage and ordering cost

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Question - A toy manufacturer wants to determine the production costs of its product for which it has estimated an annual demand of 40,000 units per year.

The company is capable of manufacturing 1,000 units per week working from Monday to Friday and has a demand of 800 units in the same period. The production batches for the elaboration of different products require making changes in the cutting machines and sewing machines, as well as making some adjustments in the assembly area, for this reason it has been estimated that the cost of preparing the machines It amounts to $ 1,350 per production batch.

A doll is sold for $ 15,000 and the cost of keeping the finished units in inventory corresponds to 15% of the sale price of the product.

Required - What the total annual storage and ordering cost?

Reference no: EM133042539

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