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Types of Cost Classification #1 - Fixed and Variable Cost #2 - Distribution Channel Cost #3 - Customer Cost #4 - Departmental Cost Basis of Cost Classification #1 - By Nature #2 - By Functions #3 - By Behaviour #4 - By Management Decision Making #5 - By Production Process #6 - By Time Conclusion Recommended Articles Types of Cost Classification It costs the company $ 2 to place each order (S = 2). As a result, the EOQ is calculated as follows: √ (2 x $ 2 x 2,000 units / $ 7) = 33.8 units (with rounding) Therefore, to reduce inventory costs and satisfy demand, this business should always place an order for 33 or 34 shirts. Based on this, let's calculate the total cost for our example. Purchase orders are sent by the buyer to the vendor first, and they outline exactly what the order should contain and when it should arrive. It'll include things like quantity of items, detailed descriptions of the items, the price, date of purchase, and payment terms. 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