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Published byJulian Powers Modified over 3 years ago

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Planning Ahead Inventory is an important part of many businesses. Can you think of problems that might arise from having too much or too little of a product in stock?

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Lesson Objective Calculate the annual cost of carrying inventory. Content Vocabulary carrying inventory Maintaining adequate goods to meet production or sales needs.

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Steel Facilitators estimates the annual cost of maintaining the inventory to be 25 percent of the value of the inventory. This year the company plans to maintain an inventory totaling $500,000 in value. What amount should be set as the estimated cost of carrying the inventory for the year? Example 1

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Step: Find the annual cost of carrying inventory. Inventory Value × Percent $500,000 × 25% = $125,000 Example 1 Answer

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Find the annual cost of carrying an inventory. Inventory value: $2,345.67 Percent: 26.5% Practice 1

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$621.60 Practice 1 Answer

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