Andre Candess manages an office supply store.One product in the store is computer paper.Andre knows that 10,000 boxes will be sold this year at a constant rate throughout the year.There are 250 working days per year and the lead-time is 3 days.The cost of placing an order is $30, while the holding cost is $15 per box per year.If he orders in batches of 500 boxes at a time, what is his annual ordering cost?

Question

Quizplus · Accepted Answer

The annual ordering cost is calculated by dividing the total annual demand by the order quantity and then multiplying by the cost per order. Here, (10,000 boxes / 500 boxes per order) * $30 per order = $600.

Andre Candess Manages an Office Supply Store