How to Calculate the Annual Cost of Holding Juice Bottles at the Supermarket
Question:
What is the annual cost of holding juice bottles at the supermarket?
Answer:
To calculate the annual cost of holding juice bottles at the supermarket, we need to consider the cost of ordering and the holding cost per pack.
1. Calculate the annual ordering cost:
The demand for juice bottles is 2000 packs per year. Since the cost of a single order is 200 Dirhams, we can calculate the number of orders per year by dividing the total demand by the quantity per order:
Number of orders per year = Total demand / Quantity per order
Number of orders per year = 2000 packs / 1 pack = 2000 orders
Now, multiply the number of orders per year by the cost of a single order to find the annual ordering cost:
Annual ordering cost = Number of orders per year * Cost per order
Annual ordering cost = 2000 orders * 200 Dirhams = 400,000 Dirhams
2. Calculate the annual holding cost:
The holding cost of a pack is 20 Dirhams per pack per year. To find the annual holding cost, we multiply the holding cost per pack by the total demand:
Annual holding cost = Holding cost per pack * Total demand
Annual holding cost = 20 Dirhams/pack/year * 2000 packs = 40,000 Dirhams
3. Calculate the total annual cost:
The total annual cost is the sum of the annual ordering cost and the annual holding cost:
Total annual cost = Annual ordering cost + Annual holding cost
Total annual cost = 400,000 Dirhams + 40,000 Dirhams = 440,000 Dirhams
Therefore, the annual cost of holding juice bottles at the supermarket is 440,000 Dirhams.
Detail Explanation:
The annual cost of holding juice bottles at the supermarket is calculated by taking into account the ordering cost and holding cost per pack. By determining the number of orders per year based on the total demand and cost per order, along with calculating the annual holding cost by multiplying the holding cost per pack with the total demand, we can find the total annual cost by summing the ordering and holding costs.