=+3 Assume that the benchmark that is used to evaluate distribution centre managers includes only the out-of-pocket

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=+3 Assume that the benchmark that is used to evaluate distribution centre managers includes only the out-of-pocket costs incurred

(i.e. managers’ evaluations do not include the opportunity cost of investment tied up in holding inventory). If the manager makes the EOQ decision based upon the benchmark, the order quantity would be calculated using a carrying cost of $170.00, not

$251.20. How does excluding these opportunity costs affect the EOQ amount and the calculated annual relevant cost of ordering and carrying inventory?

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Cost Accounting A Managerial Emphasis

ISBN: 9781442563377

2nd Edition

Authors: Monte Wynder, Madhav V. Rajan, Srikant M. Datar, Charles T. Horngren, William Maguire, Rebecca Tan

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