The total cost per year for question 9,assuming no stockouts,is approximately equal to:

Question

Quizplus · Accepted Answer

The total cost per year can be calculated as:
Total cost = Annual ordering cost + Annual carrying cost
Annual ordering cost = (Number of orders per year) x (Cost per order) = (100/25) x $10 = $40
Annual carrying cost = (Average inventory level) x (Cost per unit per year) = (50/2) x $2 = $50
Total cost = $40 + $50 = $90
Total cost per year for 3 years = 3 x $90 = $270
Adding the initial inventory cost of $17.72, the total cost is approximately $547.72. Therefore, the best choice is C.

The Total Cost Per Year for Question 9,assuming No Stockouts,is