RCBarker Makes Purchasing Decisions for His Company

question 118

Multiple Choice

R.C.Barker makes purchasing decisions for his company.One product that he buys costs $50 per unit when the order quantity is less than 500.When the quantity ordered is 500 or more, the price per unit drops to $48.The ordering cost is $30 per order and the annual demand is 7,500 units.The holding cost is 10 percent of the purchase cost.If R.C.orders 500 units each time he places an order, what would the total annual holding cost be?

• A)$450
• B)$1,200
• C)$1,250
• D)$2,400

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Definitions:

Transportation Systems

The infrastructure and operations that facilitate the movement of people and goods from one location to another.

Rational Individual

This term describes an entity in economic models who makes decisions by logically assessing options to achieve the most favorable outcome according to their preferences and information.

Air Travel

The act of traveling from one place to another via an aircraft.

Minimum Value

The lowest possible amount, price, or level that something can reach.