Haulsee Inc.builds 800,000 golf carts a year and purchases the electronic motors for these carts for $370 each.Ordering costs are $540 and Haulsee's inventory carrying costs average 14% of the inventory value.What is the total inventory costs?

Question

Quizplus · Accepted Answer

The total inventory cost includes both ordering costs and carrying costs. The carrying cost is calculated as 14% of the inventory value, which is the cost of the motors multiplied by the number of motors. The ordering cost is the cost per order multiplied by the number of orders needed.