Description
Post Card Depot, an large retailer of post cards, orders 4,219,610 post cards per year from its manufacturer. Post Card Depot plans on ordering post card 6 times over the next year. Post Card Depot receives the same number of post cards each time it orders. The carrying cost is $0.17 per post card per year. The ordering cost is $426 per order.
What is the annual total costs of post card inventory?
(Round the answer to two decimal places).
Explanation & Answer
Hello!
Regardless of the number of orders, the total number of post cards ordered in a year is 4,219,610 and the cost is
4,219,610 * 0.17 = 717,333.7 ($).
The cost of 6 orders is
6 * 426 = 2556 ($).
The total cost is therefore
717,333.7 + 2556 = 719889.70 ($).
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