Question

The formula for computing Ordering cost Error factor is represented by:

A: Estimated ordering cost / Actual ordering cost

 

B: Estimated demand / Actual ordering cost

 

C: Actual ordering cost / Estimated ordering cost

 

D: Actual ordering cost / Estimated demand​

Answer 1

A: Estimated ordering cost / Actual ordering cost

Step-by-step explanation:

The above is the correct formular. This is because, inorder to determine the error factor, it is best if the person determine the estimated ordering cost. Later, the actual and exact cost would be taken inorder to for the both ordering cost to be divided. The ratio happens to be the ordering cost error.