Ordering costs-relevant costs of eoq model, Managerial Accounting

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Ordering Costs

These are incurred in getting purchased items into the company’s inventory or stores, and usually consist of clerical costs of:

•    Making the purchase demand.
•    Issuing of a purchase order
•    Follow-up action
•    Receiving the goods
•    Inspection for quality control
•    Placing goods in stores
•    Paying vendors (Suppliers)

Note:
The basic EOQ model assumes that these costs are fixed constant for each order made.

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