The formula to calculate the Total Inventory Cost (TIC) is:
\[ \text{TIC} = \left( \text{Carrying cost per unit per year} \times \frac{\text{Quantity of Each Order}}{2} \right) + \left( \text{Fixed cost per order} \times \frac{\text{Demand in Units Per Year}}{\text{Quantity of Each Order}} \right) \]
Where:
Total inventory cost is the total cost associated with ordering and carrying inventory, not including the actual cost of the inventory itself.
Let's assume the following values:
Using the formula:
\[ \text{TIC} = 3.5 \times \left( \frac{50}{2} \right) + 500 \times \left( \frac{2000}{50} \right) \]
Evaluating:
\[ \text{TIC} = 20087.5 \]
The Total Inventory Cost (TIC) is 20087.5.
| Carrying Cost per Unit per Year | Quantity of Each Order | Fixed Cost per Order | Demand in Units Per Year | Total Inventory Cost |
|---|---|---|---|---|
| 3 | 50 | 500 | 2000 | 20,075.00 |
| 3 | 50 | 750 | 2000 | 30,075.00 |
| 3 | 50 | 1000 | 2000 | 40,075.00 |
| 3 | 75 | 500 | 2000 | 13,445.83 |
| 3 | 75 | 750 | 2000 | 20,112.50 |
| 3 | 75 | 1000 | 2000 | 26,779.17 |
| 3 | 100 | 500 | 2000 | 10,150.00 |
| 3 | 100 | 750 | 2000 | 15,150.00 |
| 3 | 100 | 1000 | 2000 | 20,150.00 |
| 3.5 | 50 | 500 | 2000 | 20,087.50 |
| 3.5 | 50 | 750 | 2000 | 30,087.50 |
| 3.5 | 50 | 1000 | 2000 | 40,087.50 |
| 3.5 | 75 | 500 | 2000 | 13,464.58 |
| 3.5 | 75 | 750 | 2000 | 20,131.25 |
| 3.5 | 75 | 1000 | 2000 | 26,797.92 |
| 3.5 | 100 | 500 | 2000 | 10,175.00 |
| 3.5 | 100 | 750 | 2000 | 15,175.00 |
| 3.5 | 100 | 1000 | 2000 | 20,175.00 |
| 4 | 50 | 500 | 2000 | 20,100.00 |
| 4 | 50 | 750 | 2000 | 30,100.00 |
| 4 | 50 | 1000 | 2000 | 40,100.00 |
| 4 | 75 | 500 | 2000 | 13,483.33 |
| 4 | 75 | 750 | 2000 | 20,150.00 |
| 4 | 75 | 1000 | 2000 | 26,816.67 |
| 4 | 100 | 500 | 2000 | 10,200.00 |
| 4 | 100 | 750 | 2000 | 15,200.00 |
| 4 | 100 | 1000 | 2000 | 20,200.00 |
| 4.5 | 50 | 500 | 2000 | 20,112.50 |
| 4.5 | 50 | 750 | 2000 | 30,112.50 |
| 4.5 | 50 | 1000 | 2000 | 40,112.50 |
| 4.5 | 75 | 500 | 2000 | 13,502.08 |
| 4.5 | 75 | 750 | 2000 | 20,168.75 |
| 4.5 | 75 | 1000 | 2000 | 26,835.42 |
| 4.5 | 100 | 500 | 2000 | 10,225.00 |
| 4.5 | 100 | 750 | 2000 | 15,225.00 |
| 4.5 | 100 | 1000 | 2000 | 20,225.00 |
| 5 | 50 | 500 | 2000 | 20,125.00 |
| 5 | 50 | 750 | 2000 | 30,125.00 |
| 5 | 50 | 1000 | 2000 | 40,125.00 |
| 5 | 75 | 500 | 2000 | 13,520.83 |
| 5 | 75 | 750 | 2000 | 20,187.50 |
| 5 | 75 | 1000 | 2000 | 26,854.17 |
| 5 | 100 | 500 | 2000 | 10,250.00 |
| 5 | 100 | 750 | 2000 | 15,250.00 |
| 5 | 100 | 1000 | 2000 | 20,250.00 |