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What would be the ordering and holding cost per wheel

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Reference no: EM132951954

Question - ABC Co. procures wheels from Chinese supplier. The supplier charges $250 per order (no matter the order quantity) to cover custom fees and other expenses at $5 per wheel. ABC Co. requires 80,000 wheels per year and its annual holding cost percentage is 40%. Suppose ABC Co. orders 8,000 wheels with each order.

a. What is the sum of its ordering and inventory holding costs per year?

b. If ABC Co. orders 5000 wheels per order, then the sum of its ordering and holding costs per year is $6,200. What would be the ordering and holding cost per wheel?

Reference no: EM132951954

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