Magistrates imposed a PS3,000 fine on the company as well as ordering costs
of PS514.30 and a victim surcharge of PS170 to be paid.
* as the order quantity increases, ordering costs
Beside the possible quantity discount, gathering several items on a single order to reduce the total of these fixed ordering costs
is pretty reasonable (Kaspi and Rosenblatt ).
Consequently, ordering costs
are piecewise linear and concave.
are negligible (or near zero): If we leave out the physical delivery of physical products, under Ecommerce context, ordering costs
for all digital products are negligible or non existent.
There are three types of costs in the model: (1) holding costs calculated as given unit costs times end inventory, (2) stockout costs calculated as given unit costs times stockout level occurred, and (3) ordering costs
which are calculated if the end inventory is below the re-order point defined at the beginning of the simulation.
inventory costs are just one group of total supply chain costs and they encompass ordering costs
, holding costs and shortage costs (that occur if demand exists, but the product is out of stock).
What is more, all the equipment comes from one reliable, proven source, thereby enabling reduced ordering costs
, simplified pre-delivery inspection, single team installation and commissioning and extensive after sales support.
Given the context of day-to-day supply of goods, the criteria are likely to fall into such categories as ordering costs
, handling costs, inventory costs, throughput time, service level, and so on.