Calculating Annual Cost of Dell Keyboard Inventory
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Dell Company is selling the keyboard which sells direct to the customers.
The average demand of keyboard is 8 per week
The keyboard's cost is £20 each.
The ordering cost is £50 per order.
The holding cost is 20% per annum of the inventory value.
The company works 52 weeks per year.
Indeed, ABC Company orders 200 keyboards at a time when the inventories of keyboard fall to 30 keyboards.
Total annual cost = Inventory costs + Carrying Costs + Ordering Costs
What is the total annual cost?
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Solution Summary
Provides steps necessary to calculate the annual cost of Dell keyboard inventories.
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Let's assume you start out with 230 units in inventory. You have an order point of 30 units. The one thing that your question is missing is the lead times, like how long from order point to receiving the order is important; but let's proceed anyway. Demand is 8 units per week. You have 200 units that are ...
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