Answer:
The total annual cost of purchasing 38 units per order (purchasing, ordering and holding) is:
= $1,568,301.
Step-by-step explanation:
a) Data and Calculations:
Annual demand = 18,930 units
Unit price = $60
Total purchasing cost = $1,135,800 ($60 * 18,930)
Ordering cost is $93 per order
Total ordering cost = $46,329 ($93 * (18,930/38))
Annual Holding cost = 34% of the unit price = $20.40 ($60 * 34%)
Total holding cost = $386,172 ($20.40 * 18,930)
The total annual cost:
Total purchasing cost = $1,135,800
Total ordering cost = $46,329
Total holding cost = $386,172
Total annual cost = $1,568,301