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7 June, 13:59

For certain item, the cost minimizing other quantity obtained with the basic EOQ model is 100 units, and the total annual inventory (holding and setup) cost is $300, what is the holding cost per year for this item? a. $1.50 b. $2.00 c. $3.00 d. $150.00 e. Not enough data to determine

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  1. 7 June, 17:20
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    c. $3.00

    Explanation:

    We know that

    Average Holding cost = average inventory based on Economic order quantity * carrying cost per unit

    $150 = 50 units * carrying cost per unit

    So, the carrying cost would be $3

    The computation is shown below:

    The average carrying cost would be $300 : 2 = $150

    And, the average inventory would be 100 units : 2 = 50 units
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Home » Business » For certain item, the cost minimizing other quantity obtained with the basic EOQ model is 100 units, and the total annual inventory (holding and setup) cost is $300, what is the holding cost per year for this item? a. $1.50 b. $2.00 c. $3.00 d. $150.
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