What will the total annual inventory cost be

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Reference no: EM131751698

Sheetz' purchasing department is trying to establish an ordering policy for coffee that will minimize total costs. Forecasted demand for coffee for the next year is 300,000 lbs. The supplier offers the following quantity discount schedule.

Order Quantity Price per pound

0-9,999 11.25

10,000-29,999 11.00

30,000+ 10.55

The purchasing department estimates the cost of placing an order at $161 and the inventory holding cost to be 38% of the unit cost. If purchasing orders in lot sizes of 32,000, what will the total annual inventory cost be? Please enter your answer with two decimal places.

Reference no: EM131751698

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