The XYZ manufacturing company estimates its component parts carrying cost at 15% and its ordering cost at $9 per order. The estimated annual requirement is 48000 units at a price of $4 per unit. The company is ordering 2400 units per order. Answer the following question: 

a) Calculate the total cost per order considering the order cost and inventory holding cost. 

b) What is the most economical number of units to order? How much can XYZ save per order in terms of total cost if purchasing the most economical number of units? 

c) If there is an increase by $2 in the price of the component parts, discuss how this is going to impact the inventory level and the total cost. 

Answer rating: 100% (QA)

a To calculate the total cost per order you need to consider both the ordering cost and inventory ho... View the full answer