Annual Demand for a Product Is 40,000 Units

question 68

Multiple Choice

Annual demand for a product is 40,000 units. The product is used at a constant rate over the 365 days the company is open every year. The annual holding cost for the product is estimated to be $2.50 per unit and the cost of placing each order is $125.00. If the company orders according to the economic order quantity (EOQ) formula, then its total annual inventory cost for this product would be

• A) $100,000
• B) $50,000
• C) $5,000
• D) $2,500

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Definitions:

Biopsychosocial Approach

A holistic perspective in health care and psychology that considers biological, psychological, and social factors in understanding and treating illness.

Mental Distraction

A condition where the mind is diverted from focusing on a primary task or issue towards irrelevant thoughts or stimuli.

Endorphins

Natural, pain-relieving chemicals produced by the body that also contribute to feelings of pleasure.

Auditory Stimulation

The process of exciting the auditory system through the use of sound, which can influence various psychological and physiological responses.