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Total Optimum Cost for Purchase Model Formula

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The Total Optimum Cost for Purchase Model is the sum of the inventory and the order cost. Check FAQs

TOC p = \sqrt{2 \cdot D \cdot C c \cdot C 0 \cdot \frac{C s}{C s + C c}}

TOC_p - Total Optimum Cost for Purchase Model?D - Demand per Year?C_c - Carrying Cost?C₀ - Order Cost?C_s - Shortage Cost?

Total Optimum Cost for Purchase Model Example

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Here is how the Total Optimum Cost for Purchase Model equation looks like with Values.

Here is how the Total Optimum Cost for Purchase Model equation looks like with Units.

Here is how the Total Optimum Cost for Purchase Model equation looks like.

3713.9068 = \sqrt{2 \cdot 10000 \cdot 4 \cdot 200 \cdot \frac{25}{25 + 4}}

3713.9068 = \sqrt{2 \cdot 10000 \cdot 4 \cdot 200 \cdot \frac{25}{25 + 4}}

3713.9068 = \sqrt{2 \cdot 10000 \cdot 4 \cdot 200 \cdot \frac{25}{25 + 4}}

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Total Optimum Cost for Purchase Model Solution

Follow our step by step solution on how to calculate Total Optimum Cost for Purchase Model?

FIRST Step Consider the formula

TOC p = \sqrt{2 \cdot D \cdot C c \cdot C 0 \cdot \frac{C s}{C s + C c}}

Next Step Substitute values of Variables

∴

TOC p = \sqrt{2 \cdot 10000 \cdot 4 \cdot 200 \cdot \frac{25}{25 + 4}}

Next Step Prepare to Evaluate

∴

TOC p = \sqrt{2 \cdot 10000 \cdot 4 \cdot 200 \cdot \frac{25}{25 + 4}}

Next Step Evaluate

∴

TOC p = 3713.90676354104

LAST Step Rounding Answer

∴

TOC p = 3713.9068

Total Optimum Cost for Purchase Model Formula Elements

Variables

Functions

Total Optimum Cost for Purchase Model

The Total Optimum Cost for Purchase Model is the sum of the inventory and the order cost.

Symbol: TOC_p

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Total Optimum Cost for Purchase Model

Demand per Year

Demand per Year is the number of goods that consumers are willing and able to purchase at various prices during a given year.

Symbol: D

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Demand per Year

Carrying Cost

Carrying Cost is the total of all expenses related to storing unsold goods, and refers to the total cost of holding inventory.

Symbol: C_c

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Carrying Cost

Order Cost

Order Cost is the expenses incurred to create and process an order to a supplier.

Symbol: C₀

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Order Cost

Shortage Cost

The Shortage Cost is called the associate cost and is equal to the product's contribution margin.

Symbol: C_s

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Shortage Cost

sqrt

A square root function is a function that takes a non-negative number as an input and returns the square root of the given input number.

Syntax: sqrt(Number)

Other formulas in Manufacturing and Purchase Model category

Go EOQ Manufacturing Model with No Shortage

EOQ m = \sqrt{\frac{2 \cdot C 0 \cdot D}{C c \cdot (1 - \frac{D}{K})}}

Go EOQ Manufacturing Model with Shortage

EOQ ms = \sqrt{2 \cdot D \cdot C 0 \cdot \frac{C s + C c}{C c \cdot C s \cdot (1 - \frac{D}{K})}}

Go EOQ Purchase Model with No Shortage

EOQ p = \sqrt{2 \cdot D \cdot \frac{C 0}{C c}}

Go Maximum Stock Out Manufacturing Model

Q 1 = \sqrt{2 \cdot D \cdot C 0 \cdot C s \cdot \frac{1 - \frac{D}{K}}{C c \cdot (C c + C s)}}

How to Evaluate Total Optimum Cost for Purchase Model?

Total Optimum Cost for Purchase Model evaluator uses Total Optimum Cost for Purchase Model = sqrt(2*Demand per Year*Carrying Cost*Order Cost*Shortage Cost/(Shortage Cost+Carrying Cost)) to evaluate the Total Optimum Cost for Purchase Model, The total optimum cost for purchase model is the sum of the inventory and the order cost. It is the actual cost incurred in the production of a given level of output. Total Optimum Cost for Purchase Model is denoted by TOC_p symbol.

How to evaluate Total Optimum Cost for Purchase Model using this online evaluator? To use this online evaluator for Total Optimum Cost for Purchase Model, enter Demand per Year (D), Carrying Cost (C_c), Order Cost (C₀) & Shortage Cost (C_s) and hit the calculate button.

FAQs on Total Optimum Cost for Purchase Model

What is the formula to find Total Optimum Cost for Purchase Model?

The formula of Total Optimum Cost for Purchase Model is expressed as Total Optimum Cost for Purchase Model = sqrt(2*Demand per Year*Carrying Cost*Order Cost*Shortage Cost/(Shortage Cost+Carrying Cost)). Here is an example- 3713.907 = sqrt(2*10000*4*200*25/(25+4)).

How to calculate Total Optimum Cost for Purchase Model?

With Demand per Year (D), Carrying Cost (C_c), Order Cost (C₀) & Shortage Cost (C_s) we can find Total Optimum Cost for Purchase Model using the formula - Total Optimum Cost for Purchase Model = sqrt(2*Demand per Year*Carrying Cost*Order Cost*Shortage Cost/(Shortage Cost+Carrying Cost)). This formula also uses Square Root (sqrt) function(s).

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Total Optimum Cost for Purchase Model Formula

Total Optimum Cost for Purchase Model Example

Total Optimum Cost for Purchase Model Solution

Total Optimum Cost for Purchase Model Formula Elements

Other formulas in Manufacturing and Purchase Model category

How to Evaluate Total Optimum Cost for Purchase Model?

FAQs on Total Optimum Cost for Purchase Model

Variable Name