Delivery and storage costs
The total cost associated with the delivery and storage of raw materials was calculated according to the formula:
The total cost associated with the delivery and storage of raw materials was calculated according to the formula:
For controlling the quantity c . D, i.e., how much they pay for the product, it does not matter, because the derivative of this expression equals zero. What matters is how much they purchase and the storage cost, although this value is included in the formula for total costs. For raw material SA costs are presented in tab. 5.
As can be seen, the optimal size of the ordered batch, calculated according to the formulas, is almost twice as low. This proves the necessity of being guided by formulas when determining batch sizes. When ordering 5,150 meters of foam, the company incurred higher costs related to delivery and storage amounting to 148,515.74, which is 569.78 more.
The total cost associated with the delivery and storage of raw material SB according to the formula:
The total cost associated with the delivery and storage of raw material SB according to the formula:
In this case as well, the optimal size calculated based on the formula is twice as low, therefore the costs are also lower. For the intuitive quantity ordered so far (Q = 2,000), the delivery and storage costs amount to 117,389.05 PLN, which is 387.97 PLN higher.
The article comes from the magazine “Logistyka” 2003/5.