The company currently uses a batch size of 5,000 pounds for making Super Thrive. What is the annual holding (carrying) cost based on this batch size?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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The annual demand for the Super Thrive brand
plant food manufactured by Cumberbatch and
Dunst Indoor Plants Company is 120,000 pounds.
The annual holding cost (also known as carrying
charge) is $0.05 per pound, and Operations
Manager Kirsten Benedict has calculated the cost
of setting up machinery for making the plant food
to be $20.
The company currently uses a batch size of 5,000
pounds for making Super Thrive. What is the annual
holding (carrying) cost based on this batch size?
Transcribed Image Text:The annual demand for the Super Thrive brand plant food manufactured by Cumberbatch and Dunst Indoor Plants Company is 120,000 pounds. The annual holding cost (also known as carrying charge) is $0.05 per pound, and Operations Manager Kirsten Benedict has calculated the cost of setting up machinery for making the plant food to be $20. The company currently uses a batch size of 5,000 pounds for making Super Thrive. What is the annual holding (carrying) cost based on this batch size?
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