A niche car manufacturer obtains tyres from a single supplier. Demand is constant and the target is to sell 4,000 cars through their dealership per year. The estimated cost of ordering tyres is £20 each time an order is placed and the annual cost of holding inventory is 10% of the purchase cost. Given that the company buys tyres at £10 each, calculate the economic order quantity and the total annual cost of the tyres.
A niche car manufacturer obtains tyres from a single supplier. Demand is constant and the target is to sell 4,000 cars through their dealership per year. The estimated cost of ordering tyres is £20 each time an order is placed and the annual cost of holding inventory is 10% of the purchase cost. Given that the company buys tyres at £10 each, calculate the economic order quantity and the total annual cost of the tyres.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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