ABC instruments manufacturer in Indonesia, make and sell guitars. Lets assume they operate at maximum capacity, making guitars seven days a week, 52 weeks per year, with a production result of 100 guitars per week. ABC ship all guitars they can produce as soon as they can, keeping no safety stock. The guitars are shipped to Germany, where a wholesaler distributes them to all over Europe. Sales in units is the same as the production in Indonesia.

The value of a guitar leaving production is 200. The cost of capital is estimated to 15%.

The cost for holding inventory is 10%. Shipments dispatch every eight weeks.

The shipping time is six weeks, and the cost is 5/unit.

In Germany, the wholesaler keeps a safety stock corresponding to a week of sales.

Questions are;

Q1. What is the yearly inventory holding cost in Indonesia?

Q2. What is the yearly inventory holding cost during transportation?

Q3. What is the yearly inventory holding cost in Germany?

Q4. What is the yearly total cost , considering the total inventory carrying cost and shipping?