What is the annual cost for storing item x


Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 2000 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more item X, it costs $10.

(a) Whenever item X is ordered, what should the order size be?
(b) What is the annual cost for ordering item X?
(c) What is the annual cost for storing item X?

Request for Solution File

Ask an Expert for Answer!!
Operation Management: What is the annual cost for storing item x
Reference No:- TGS086489

Expected delivery within 24 Hours