the investment in the inventory will be 68% of $12.99 that is $8.83. The cost of carrying this will be 21 percent that is $1,85. If we multiply this by 204 units found above we get a yearly cost of $337.4. Now if the ordering is done once every two weeks then the ordering cost will be 26 X $20 = $520. if this is added to the above cost we get a total of $857.4.
Put yourself in Sue McCaskey’s position and prepare a
detailed report to Dan Block and Ed Spriggs on managing
the inventory of the EG151 exhaust gasket and the
DB032 drive belt. Be sure to present a proper inventory
system and recognize all relevant costs.
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