d) What would the annual ordering cost be? What would the average inventory be? e) f) What would the annual holding cost be? See equations below if needed:

Practical Management Science
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Chapter2: Introduction To Spreadsheet Modeling
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XYZ company has determined that the annual demand for type A material is 20,000 pounds. Salma, who
works in her brother's factory, is in charge of purchasing. She estimates that it costs $15 every time an
order is placed. This cost includes her wages, the cost of the forms used in placing the order, and so on.
Furthermore, she estimates that the cost of carrying one pound in inventory for a year is 0.05 $.
Assume that the demand is constant throughout the year. (Note: $ is a dollar sign)
d) What would the annual ordering cost be?
e) What would the average inventory be?
f) What would the annual holding cost be?
See equations below if needed:
Number of
orders placed
per year
Annual
Ordering
cost
Annual
hdding=
Annual demand
Number of units
in each order
Average
inventory
Ordering cost
per order
Ordering cost
per order
(Carrying cost
per unit
=
b.c
Transcribed Image Text:XYZ company has determined that the annual demand for type A material is 20,000 pounds. Salma, who works in her brother's factory, is in charge of purchasing. She estimates that it costs $15 every time an order is placed. This cost includes her wages, the cost of the forms used in placing the order, and so on. Furthermore, she estimates that the cost of carrying one pound in inventory for a year is 0.05 $. Assume that the demand is constant throughout the year. (Note: $ is a dollar sign) d) What would the annual ordering cost be? e) What would the average inventory be? f) What would the annual holding cost be? See equations below if needed: Number of orders placed per year Annual Ordering cost Annual hdding= Annual demand Number of units in each order Average inventory Ordering cost per order Ordering cost per order (Carrying cost per unit = b.c
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