Total Ordering Cost Example
Total ordering cost for
the year is calculated by multiplying the number of order placed per year with
cost of placing one order.
Total Ordering Cost =Number
of Orders x Cost per order
Example
Number of order Placed during the Year = 20
Cost incurred per order = 1000
Solution
Number of Orders x Cost
per order
Total ordering cot = 20 x 1000
= 20000
(Total ordering Cost)
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