If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?
A)There are 50 orders in the year.
B)The total annual ordering cost is $250.
C)The holding cost per unit is $2.50.
D)The total annual holding costs are $25,000 (= $2.50 * 10,000).

Question

Quizplus · Accepted Answer

To find the total annual ordering cost, we need to divide the annual demand by the order quantity per order:

10,000 / 2,000 = 5 orders per year

Then, we can multiply the number of orders per year by the cost per order:

5 x $50 = $250

Therefore, the correct statement is that the total annual ordering cost is $250.

If the Order Quantity Per Order Is 2,000 Units,annual Demand