Problem on the annual total costs

Business & Finance
Tutor: None Selected Time limit: 1 Day

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

Thank you for the opportunity to help you with your question!

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


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Oct 6th, 2015

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