Annual Demand for a Product Is 40,000 Units

question 4

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.

---

Definitions:

Performance Metrics

Metrics employed to evaluate, benchmark, and monitor output or achievements over a period.

Performance Targets

Specific goals set by a business or project to gauge the effectiveness of operations and employees.

Strategic Initiatives

Key projects or plans undertaken by an organization to support and achieve its long-term goals and objectives.

Performance Metrics

Key indicators used to evaluate the success or efficiency of an activity or organization in achieving its objectives.