In ABC Printing, Queen’s black is a popular input with an an…
In ABC Printing, Queen’s black is a popular input with an annual demand of 50,000 gallons. Ordering cost of $50 per order, and the holding cost is $5 per unit per year; the economic order quantity is 1000. Hence during the year, they used 1000 as the order quantity. An audit of the costs revealed that the true ordering cost was only $25 and the true holding cost was $10 per gallon per year. The correct order quantity would have been 500. How much did ABC lose due to incorrect cost information during the year?