A Product Has an Annual Demand of 3600 Units

question 40

Short Answer

A product has an annual demand of 3600 units. Unit cost for this product is $3. Set up cost is $20 and the inventory carrying rate as a percent of the unit cost is 25%. The product is produced in-house where the daily production rate is 50 units. Assume 360 working days per year. Determine the annual ordering cost and carrying cost if the optimal production quantity is made each time.

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Definitions:

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale.

Equity Groups

Collectives of investors focusing on buying equity stakes in companies either for strategic control or investment purposes.

Financial Disaster

A catastrophic situation where financial losses are so extreme that they disrupt the normal operations of an economy or organization.

Propensity to Overestimate

A cognitive bias where individuals tend to overvalue the probability of positive outcomes or success.