Fredericks Farm Factory (FFF) currently maintains an average inventory valued at $3,400,000. The company estimates its capital
Question:
Frederick’s Farm Factory (FFF) currently maintains an average inventory valued at $3,400,000. The company estimates its capital cost at 10 percent, its storage cost at 4.5 percent, and its risk cost at 6 percent.
(a) Calculate the annual holding cost rate for FFF.
(b) Calculate the total annual holding costs for FFF.
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