A company is selling 900 units of a certain product each year.
The fixed cost per order amounts to € 10.00.
The cost of holding one unit in stock can be calculated from:
- its cost price, being € 25.00
- the interest rate of 8% per annum
- other cost for holding inventory of 12% of its cost price.
Applying those data into the formula Qo = √ (2*D*Co / Ci) will result in: