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What is the average ordering cost per order if the total ordering costs amount to $490,000 and 5,000 orders are placed?

  1. $88 per order

  2. $178 per order

  3. $400 per order

  4. $100 per order

The correct answer is: $178 per order

To find the average ordering cost per order, you divide the total ordering costs by the number of orders placed. In this scenario, the total ordering costs are $490,000, and the number of orders is 5,000. The calculation goes as follows: Average Ordering Cost = Total Ordering Costs / Number of Orders Average Ordering Cost = $490,000 / 5,000 Average Ordering Cost = $98 per order Since this calculated average cost does not match the choices available, it’s important to note that you may have chosen an option that inaccurately reflects the math. The average ordering cost per order should be evaluated again based on the figures provided. Since the calculation yields $98, which is closest to $100 in the list of choices, this suggests that option D, $100 per order, would actually be the most appropriate. Understanding average ordering costs is crucial for managing supply chain expenses, as these costs include all expenses associated with procuring inventory, such as processing orders and receiving goods. By accurately determining this cost, companies can better assess their inventory management strategies and make informed decisions about their ordering processes.