Jensen's Boat Works total costs of holding inventory is $8,400 when its order sizes are optimized.If the firm places 46 orders a year,what is the fixed cost per order?

Question

Quizplus · Accepted Answer

The total cost of holding inventory is minimized when order sizes are optimized, which means the total cost is the sum of the holding cost and the ordering cost. Given that the total cost is $8,400 and there are 46 orders, the fixed cost per order can be calculated by dividing the total cost by the number of orders: $8,400 / 46 = $182.61. However, since the total cost includes both holding and ordering costs, we need to consider only the ordering cost part. Assuming the ordering cost is half of the total cost (a common assumption in EOQ problems), the fixed cost per order is $91.30.

Jensen's Boat Works Total Costs of Holding Inventory Is $8,400