The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items:

Annual demand is 33,000 packages per year. The purchase price per package is $50.
What is the annual relevant carrying costs?

Question

The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items:

Annual demand is 33,000 packages per year. The purchase price per package is $50.
What is the annual relevant carrying costs?

Quizplus · Accepted Answer

Unit carrying costs = ($50 × 0.17) + $6 = $14.5
EOQ = 11ea1398_f0eb_7217_a1e4_e9ba5f0e399a_TB3027_11 = 1446.99 units
Annual relevant carrying costs = (1446.99 / 2) × $14.5 = $10,491

The Allianz Company Produces a Specialty Wood Furniture Product, and Has