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Asked Sep 9, 2019
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ABC Company sells 5,500 pens per year with a constant demand throughout the
year. ABC purchases the pens at the cost of $300 per unit. Ordering cost for the
company is $100 per order. Holding cost for the company is $10 per year. Currently
the company is ordering the products in lots of 200 units. What would be the total
holding cost for ABC?
a 1000
b) 2500
c) 800
d) None of the above
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ABC Company sells 5,500 pens per year with a constant demand throughout the year. ABC purchases the pens at the cost of $300 per unit. Ordering cost for the company is $100 per order. Holding cost for the company is $10 per year. Currently the company is ordering the products in lots of 200 units. What would be the total holding cost for ABC? a 1000 b) 2500 c) 800 d) None of the above

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Expert Answer

Step 1

Assuming an EOQ model the total holding (or carrying cost) is given by the formula:

Total holding ...

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ABC Classification of Inventory

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