The Annual Demand for a Product Has Been Projected at 2,000

Multiple Choice

The annual demand for a product has been projected at 2,000 units.This demand is assumed to be constant throughout the year.The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost.Currently, the purchase cost is $40 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 6 days.Currently, the company is ordering 250 units each time an order is placed.What is the total holding cost for the year using this policy?

A) $400
B) $1,000
C) $1,400
D) $2,000