The Annual Demand for a Product Has Been Projected at 2,000

question 34

Multiple Choice

The annual demand for a product has been projected at 2,000 units.This demand is assumed to be constant throughout the year.The ordering cost is $20 per order,and the holding cost is 20 percent of the purchase cost.Currently,the purchase cost is $40 per unit.There are 250 working days per year.Whenever an order is placed,it is known that the entire order will arrive on a truck in 6 days.Currently,the company is ordering 500 units each time an order is placed.What is the total holding cost for the year using this policy?

• A)$400
• B)$2,000
• C)$4,000
• D)$8,000
• E)None of the above

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