Hello, I am struggling to calculate the economic order quantity for a homework problem using this formula,
https://wikimedia.org/api/rest_v1/media/math/render/svg/7d7c52b45e0bc4b8b9bca91916257130abc9326b
I am not sure how to calculate the h value ( holding cost), this is the information given -
Last years total storage facilities running cost was $190,000
Cost of money invested in stock last year was $110,000
Average total value of stock during last year was $1,250,000
There are 5 different items i need to calculate the holding cost for, we are given the material costs of each
To calculate the h value i have done 190,000/1,250,000 = 0.152 , then just done 0.152*34 (34 is material cost for one of the items) .
I don't feel very confident that iv done this correctly but don't know how else to do it?
Any advice greatly appreciated!
Thanks
https://wikimedia.org/api/rest_v1/media/math/render/svg/7d7c52b45e0bc4b8b9bca91916257130abc9326b
I am not sure how to calculate the h value ( holding cost), this is the information given -
Last years total storage facilities running cost was $190,000
Cost of money invested in stock last year was $110,000
Average total value of stock during last year was $1,250,000
There are 5 different items i need to calculate the holding cost for, we are given the material costs of each
To calculate the h value i have done 190,000/1,250,000 = 0.152 , then just done 0.152*34 (34 is material cost for one of the items) .
I don't feel very confident that iv done this correctly but don't know how else to do it?
Any advice greatly appreciated!
Thanks