Which of the following equations determines the total annual ordering costs of inventory?

Question

Quizplus · Accepted Answer

The equation that determines the total annual ordering costs of inventory is Total demand ¸ Order quantity × Cost to place an order. Choice A is incorrect because it only calculates the cost to place an order, not the total annual ordering costs. Choice B is incorrect because it calculates the unit carrying costs per year, not the total annual ordering costs. Choice D is incorrect because it only divides the total demand by 2 and multiplies it by the cost to place an order, which is an incorrect formula for calculating the total annual ordering costs.

Which of the Following Equations Determines the Total Annual Ordering