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The annual demand for a product has been projected at 2,500 units. This demand is assumed to
be constant throughout the year. The ordering cost is $30 per order, and the holding cost is 40
percent of the purchase cost. Currently, the purchase cost is $50 per unit. There are 250 working
days per year. Whenever an order is placed, it is known that the entire order will arrive on a truck
in 8 days. What is the total holding cost for the year using this policy?
Solution

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The annual demand for a product has been projected at 2,500 units. T.pdf

  • 1. The annual demand for a product has been projected at 2,500 units. This demand is assumed to be constant throughout the year. The ordering cost is $30 per order, and the holding cost is 40 percent of the purchase cost. Currently, the purchase cost is $50 per unit. There are 250 working days per year. Whenever an order is placed, it is known that the entire order will arrive on a truck in 8 days. What is the total holding cost for the year using this policy? Solution