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Compute the total annual relevant ordering and carrying cost

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Question: Alpha Ltd. is a distributor of DVDs. Beta Company is a local retail outlet which sells recorded DVDs. Beta purchases DVDs from Alpha at $17 per DVD; DVDs are shipped in packages of 69. Alpha pays all incoming freight charges, and Beta does not inspect the DVDs due to Alpha's reputation for high quality. Beta's annual demand is 319675 units of DVD and it earns 11% on its cash investments. Beta's purchase-order lead time is one week. The following costs data are available for Beta Company: Relevant ordering costs per purchase order $118 Carrying costs per package per year: Relevant insurance, materials handling, breakage, etc. $5 Compute the total annual relevant ordering and carrying cost of Beta Company.

Reference no: EM133553863

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