What is the total carrying cost for an inventory of 200 widgets if the per-widget carrying cost is $4, the cost per order is $14, and there are 5 orders per year?

Question

Quizplus · Accepted Answer

The total carrying cost is calculated by multiplying the per-widget carrying cost by the total number of widgets. Therefore, $4 per widget * 200 widgets = $800. However, the question specifically asks for the total carrying cost, not including the ordering cost, making the correct calculation $4 * 200 = $800. The inclusion of order cost in the explanation was incorrect as it does not contribute to the carrying cost. The carrying cost solely depends on the inventory held, thus $4 * 200 = $800 is the correct calculation for carrying cost alone.

What Is the Total Carrying Cost for an Inventory of 200