Mathematics · Inventory Management
A manufacturing company uses 25,000 components at a constant rate during a year. Each order placed with the supplier of the components is for 2,000 components, which is the economic order quantity. The company holds a buffer inventory of 500 components. The annual cost of holding one component in inventory is $2. What is the total annual cost of holding inventory of the component?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$2,500
- 2$3,000✓
- 3$4,500
- 4$5,000
Correct answer
$3,000
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