Mathematics · Commercial Mathematics
A company uses the Economic Order Quantity (EOQ) model to establish reorder quantities. The following details are given: Ordering costs = $25 per order Holding costs = 10% of purchase price = $4 per unit annually Annual demand = 20,000 units Purchase price = $40 per unit EOQ = 500 units If no safety inventory is held, what is the total annual cost of inventory (total purchase cost + total ordering cost + total holding cost)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$803,000
- 2$802,000✓
- 3$33,500
- 4$22,000
Correct answer
$802,000
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