Final answer:
To calculate the total costs for order sizes of 25, 40, 50, 60, and 100, one must determine the ordering cost and holding cost, then sum these costs for each order size. The costs should be calculated separately and rounded to two decimal places.
Step-by-step explanation:
The student asked to calculate the total cost for different order sizes given that Abey Kuruvilla uses 1,220 units of a spare part that costs $26 per order, with an annual holding cost of $25. To determine the total cost, we consider both the ordering cost and the holding cost for each order size. The ordering cost is calculated by dividing the total demand (1,220 units) by the order size and then multiplying the result by the cost per order ($26). Holding cost is calculated by dividing the order size by 2 (average inventory) and then multiplying the result by the holding cost per unit ($25).
- For an order size of 25: Total Cost = (1,220 / 25) * $26 + (25 / 2) * $25
- For an order size of 40: Total Cost = (1,220 / 40) * $26 + (40 / 2) * $25
- For an order size of 50: Total Cost = (1,220 / 50) * $26 + (50 / 2) * $25
- For an order size of 60: Total Cost = (1,220 / 60) * $26 + (60 / 2) * $25
- For an order size of 100: Total Cost = (1,220 / 100) * $26 + (100 / 2) * $25
These calculations must be done separately for each order size and the results rounded to two decimal places as requested by the student.