Annual ordering costs
+
Annual holding costs
=
Total annual cost:
Customer demand is 25 units per day, 7 days
a week.
200
Order Cost = $9 regardless of quantity ordered
Orders per year:
Cost per order:
Annual ordering costs:
$9
Inventory Holding Cost = $0.005/day for each unit
Average inventory:
Daily holding costs:
Annual holding costs:
$0.50
Numbers may not sum due to rounding.