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Calculate the transit inventory cost the safety inventory

Hamilton Fabricators at Te Rapa orders steel plates from the Te Akau steel plant on a regular basis. An investigation revealed the following details: Annual demand = 5,000 tons

Cost of steel = $ 2,000 per ton

Current order size = 500 tons, transported by TranzRail

TranzRail transport cost = $100 per ton

Safety inventory carried = 50% of demand during replenishment lead time

Inventory holding cost = 25% of purchase price per year

Replenishment lead time = 5 days

Calculate the transit inventory cost, the safety inventory cost, and the transportation cost on an annual basis.

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Business Management: Calculate the transit inventory cost the safety inventory

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Business Management: Calculate the transit inventory cost the safety inventory

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