Post Card Depot, an large retailer of post cards, orders 4,750,480 post cards pe
ID: 2652213 • Letter: P
Question
Post Card Depot, an large retailer of post cards, orders 4,750,480 post cards per year from its manufacturer. Post Card Depot plans on ordering post card 18 times over the next year. Post Card Depot receives the same number of post cards each time it orders. The carrying cost is $0.08 per post card per year. The ordering cost is $423 per order.
What is the annual total costs of post card inventory? The answer is $18,171.62. Could someone please explain how to get to that answer and the formula used?
Explanation / Answer
Total Cost= Ordering Cost+ Carrying Cost
Ordering Cost = 423*18 = $7614
carrying Cost
4750480/18= 263916/2= 131958
Carring Cost=131958*.08=10556.62
Total Cost=7614+10557.62 = $ 18171.62