Illustrate what are the annual costs of ordering hd

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Q. 2. Assume you are building custom motorcycles. All custom bikes use some standard parts. Part number HD-60 is stocked in your inventory of component parts. Each year you use about 2,000 HD-60 components at a cost of $25 each. Storage costs, which comprise insurance also cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for HD-60 components, it costs $10. (a) Explain how many items of HD-60 should be ordered at a time? (b) Illustrate what are the annual costs of ordering HD-60 components? (c) Illustrate what is the annual cost of storing HD-60 components?

Reference no: EM1377367

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