SCM 300 Questions and Answers
Total Annual Cost of Inventory
TC = DC+(Q/2)H+(D/Q)S
Annual Cost to Purchase Inventory - Buy it
DC
Annual Holding Cost - Hold it
(Q/2)H
Annual Ordering Cost - Order it
(D/Q)S
D
Annual Demand for Item
C
Cost per unit
H
Annual holding cost per unit (20-45%)
S
Cost to place a single order
Q
Order size (lot size or EOQ)
Average inventory
(Q/2)
Orders Placed Per Year
(D/Q)
Time Between Orders
Total Annual Cost of Inventory
TC = DC+(Q/2)H+(D/Q)S
Annual Cost to Purchase Inventory - Buy it
DC
Annual Holding Cost - Hold it
(Q/2)H
Annual Ordering Cost - Order it
(D/Q)S
D
Annual Demand for Item
C
Cost per unit
H
Annual holding cost per unit (20-45%)
S
Cost to place a single order
Q
Order size (lot size or EOQ)
Average inventory
(Q/2)
Orders Placed Per Year
(D/Q)
Time Between Orders
