Reference no: EM1376592
Q. X is a standard item stocked in a company's inventory of component parts. Each year firm, on a random basis, uses about 2,000 of item X, which costs $25 each. Storage costs, which include insurance also cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more items X, it costs $10.
a. Whenever item X is ordered, illustrate what should be order size?
b. Illustrate what is annual cost for ordering item X?
c. Illustrate what is annual cost for storing item X?
X is a standard item stocked in a company's inventory of component parts. Each year firm, on a random basis, uses about 2,000 of item X, which costs $25 each. Storage costs, which include insurance also cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more items X, it costs $10.
Whenever item X is ordered, illustrate what should be order size?
Illustrate what is annual cost for ordering item X?
Illustrate what is annual cost for storing item X?
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