A company has collected the following inventory data for an item.What is the total annual cost for this item?
Annual demand for the item D = 500
Unit purchase cost for the item C = 10
Fixed cost of placing an order S = 20
Cost of holding one unit in inventory for a year i = 30%
Order quantity Q = 50
A)275
B)450
C)5,275
D)5,450

Question

Quizplus · Accepted Answer

Total annual cost = (D/Q) * (S + i * C * Q/2) = (500/50) * (20 + 0.3 * 10 * 50/2) = 5,275

A Company Has Collected the Following Inventory Data for an Item.What