##### Problem on the annual total costs

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Post Card Depot, an large retailer of post cards, orders 3,160,080 post cards per year from its manufacturer. Post Card Depot plans on ordering post card 8 times over the next year. Post Card Depot receives the same number of post cards each time it orders. The carrying cost is \$0.06 per post card per year. The ordering cost is \$233 per order.

What is the annual total costs of post card inventory?

Oct 6th, 2015

No of post cards ordered in 1 year =  3,160,080

Carrying Cost of each post card                    = \$0.06

Therefore total Carrying cost of 3,160,080 post cards = No of post card    X   cost of each post card

= 3,160,080   X  0.06

= \$189,604.80

Cost of each order of post card    =  \$233

Therefore total cost of 8 times order  = cost of each order    X   no of order

=  \$233    X   8

=  \$1,864

Therefore annual total costs of post card inventory  = Total Carrying cost    +   Total cost of 8 times order

=  \$ 189,604.80 +  \$1,864

=  \$191,468.80

Annual total costs of post card inventory   =  \$191,468.80

Oct 6th, 2015

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Oct 6th, 2015
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Oct 6th, 2015
Aug 18th, 2017
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