Question

restaurant a uses 60 bags of tomatoes each month. the tomateos are purchased from a supplier for a price of 80 per bag and an ordering cost of 20 per order. what are its ordering and holding costs per year expressed as a percentage of the annual pruchasing cost

Answer 1

To calculate the ordering and holding costs per year as a percentage of the annual purchasing cost, you need to know the annual purchasing cost. Use the formulas provided to calculate the ordering and holding costs, based on the number of bags purchased per month and the cost per bag.

Step-by-step explanation:

In order to calculate the ordering and holding costs per year as a percentage of the annual purchasing cost, we need to know the annual purchasing cost. Let's assume the restaurant operates for 12 months in a year. The annual purchasing cost can be calculated by multiplying the number of bags purchased per month by the cost per bag:

Annual Purchasing Cost = Monthly Purchasing Cost x Number of Months = $80 x 60 bags x 12 months = $57,600

Ordering Cost per Year = Ordering Cost per Order x Number of Orders per Year = $20 x (12 months / Average Time Between Orders)

Holding Cost per Year = (Average Inventory Level / 2) x Cost per Bag x Holding Cost Percentage = (Number of Bags per Order / 2) x $80 x Holding Cost Percentage

To calculate the holding cost percentage, we need more information about the restaurant's holding cost policy. Once we have that information, we can substitute the values into the formulas and calculate the ordering and holding costs per year as a percentage of the annual purchasing cost.