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Post Card Depot, an large retailer of post cards, orders 5,814,674 post cards per year from...

Post Card Depot, an large retailer of post cards, orders 5,814,674 post cards per year from its manufacturer. Post Card Depot plans on ordering post card 22 times over the next year. Post Card Depot receives the same number of post cards each time it orders. The carrying cost is $0.11 per post card per year. The ordering cost is $468 per order.

What is the annual total inventory management costs of post card inventory?

(Round the answer to two decimal places).

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Answer #1

the total inventory management cost will be the sum of Ordering Cost and Inventory Carrying cost for Post card depot,

Ordering Cost = No. of Orders X Ordering Cost per Order

Carrying Cost    = Total Inventory Required X Carrying Cost per unit of inventory

Accordingly,

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