Andre Candess manages an office supply store.One product in the store is computer paper.Andre knows that 10,000 boxes will be sold this year at a constant rate throughout the year.There are 250 working days per year and the lead-time is 3 days.The cost of placing an order is $30, while the holding cost is $15 per box per year.If he orders in batches of 500 boxes at a time, what is his annual holding cost?
A)$1500
B)$3000
C)$3750
D)$4500

Question

Quizplus · Accepted Answer

The annual holding cost can be calculated using the formula: Holding Cost = (Order Quantity / 2) * Holding Cost per Unit. Here, the order quantity is 500 boxes, and the holding cost per unit is $15. So, the annual holding cost = (500 / 2) * $15 = 250 * $15 = $3750.

Andre Candess Manages an Office Supply Store