Annual Demand for a Product Is 40,000 Units

question 52

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 average inventory level for this product would be

• A)20,000 units.
• B)10,000 units.
• C)2,500 units.
• D)1,000 units.

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Definitions:

Ethics

Ethics refers to the principles and moral beliefs that guide individual or group behavior, distinguishing between what is right and wrong.

Conduct

The manner in which an individual behaves or performs an activity, often judged against a set of standards or ethical codes.

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An organized group of individuals living together in a community or larger group, characterized by shared laws, traditions, and values.

Communication Process

The systematic series of actions, reactions, and interactions by which information is exchanged between individuals through a common system of symbols, signs, or behavior.