Total carrying cost equals ________.
A)the average carrying cost per item times the maximum level of inventory
B)the average carrying cost per item times the minimum level of inventory
C)the average carrying cost per item times the average level of inventory divided by 2
D)the average carrying cost per item times the average level of inventory

Question

Quizplus · Accepted Answer

Total carrying cost is the cost of holding inventory, which is calculated by multiplying the average carrying cost per item with the average level of inventory. Therefore, option D is the correct choice. Option A is incorrect because it uses the maximum level of inventory instead of the average level of inventory. Option B is incorrect because it uses the minimum level of inventory instead of the average level of inventory. Option C is incorrect because it divides the average level of inventory by 2, which is an incorrect calculation.

Total Carrying Cost Equals ________