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

---

Definitions:

Importer

An individual or firm that brings goods or services into a country from abroad for sale.

Pairs Of Pants

A measure or quantity that refers specifically to trousers, counted in units of two legs each.

Current Account

A component of a country's balance of payments that measures the trade of goods and services, net income, and direct transfers with the rest of the world.

Financial Account

A component of the balance of payments that records investment flows and holdings of foreign assets by domestic residents and domestic assets by foreigners.