Question

Suppose Ollah decides to order 200 bags at a time. What would the total ordering and holding costs for the year​ be? (For this​ problem, don't consider safety stock when calculating holding​ costs.)

Answer 1

Annual ordering cost = = $30

Annual Holding Cost = $200

Step-by-step explanation:

order size = Q1 = 200

Annual ordering cost = (A/Q1) x S = (400/200) x 15 = $30

Annual Holding Cost = (Q1/2) x H = (200/2) x 2 = $200