Total Ordering Cost Formula
Total Ordering cost can be
calculated formula. Total ordering cost for the year is calculated by
multiplying the number of orders to be placed during the year with cost of
placing one per order.
Total
Ordering Cost =Number of Orders x Cost per order
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Total Ordering Cost Example
Number of orders per Year = 40
Cost of per order = 2000
Calculate total ordering cost?
Solution
Number of Orders during
the Year x Cost per order
Total ordering cost = 40 x 2000
= 80,000
(Total ordering Cost)
Total ordering cost is
important calculation for future budgeting & future planning. It also helps
to plan future cash flows.
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