A Product Has Demand of 4000 Units Per Year

question 3

Multiple Choice

A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost __________ per year in total annual inventory costs.

• A) $400
• B) $800
• C) $1200
• D) Zero; this is a class C item.
• E) Cannot be determined because unit price is not known.

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Definitions:

Investment Banking

The sale of stocks and bonds for corporations.

Discount Rate

The interest rate charged to commercial banks and other financial institutions for loans received from the central bank.

Debit Card

A card that looks like a credit card but works like a check; using it results in a direct, immediate, electronic payment from the cardholder’s checking account to a merchant or third party.