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Ostrovityanka [42]
3 years ago
11

Using the fixed-order quantity model, which of the following is the total ordering cost of inventory given an annual demand of 3

6,000 units, a cost per order of $80, and a holding cost per unit per year of $4.
A) $849
B) $1,200
C) $1,889
D) $2,267
E) $2,400
Business
1 answer:
Gennadij [26K]3 years ago
3 0

Answer:

E) $2,400

Explanation:

optimal order quantity = sqrt{(2*D*S)/H}

                                     = sqrt{(2*36,000*$80)/$4}

                                     = $1,200

number of orders per year = $36,000/$1,200

                                             = $30

total ordering cost = $30*$80

                               = $2,400

Therefore, The total ordering cost of inventory is $2,400.

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