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Question: Millennium Liquors is a wholesaler of sparkling wines. Their most popular product is the French B...
Millennium Liquors is a wholesaler of sparkling wines. Their most popular product is the French Bete Noire which is shipped directly from France. Weekly demand is for 45 cases. Millennium purchases each case for $125, there is a $275 fixed cost for each order (independent of the quantity ordered) and their annual holding cost is 25 percent.
b.If Millennium chooses to order 350 cases each time, what is the sum of their annual ordering and holding costs? (Round your answer to 2 decimal places.)
Explanation / Answer
Total demand = 45*52 = 2340
NO of batches to be ordered = 2340/350 = 7 approx
Purchase cost = 125 * 2340 = 292500
Fixed cost = 275*7 = 1925
Total ordering cost = $294425
Annual holding cost = 0.25 *294425 = $ 73606.25
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