company is planning for its financing needs and uses the basic fixed-order quantity inventory model.Which of the following is the total cost (TC)of the inventory given an annual demand of 10,000,setup cost of $32,a holding cost per unit per year of $4,an EOQ of 400 units,and a cost per unit of inventory of $150?
A)$1,501,600
B)$1,498,200
C)$500,687
D)$499,313
E)None of these

Question

Quizplus · Accepted Answer

The total cost (TC) in the basic fixed-order quantity inventory model is calculated as: TC = (D/Q) * S + (Q/2) * H + D * C, where D is the annual demand, Q is the EOQ, S is the setup cost, H is the holding cost per unit, and C is the cost per unit. Plugging in the values: TC = (10,000/400) * 32 + (400/2) * 4 + 10,000 * 150 = $1,501,600.

Company Is Planning for Its Financing Needs and Uses the Basic