Annual Demand for a Product Is 40,000 Units

Multiple Choice

Annual demand for a product is 40,000 units.The product is used at a constant rate over the 365 days the company is open every year.The annual holding cost for the product is estimated to be $2.50 per unit and the cost of placing each order is $125.00.If the company orders according to the economic order quantity (EOQ) formula then its total annual inventory cost for this product would be

A) $100,000.
B) $50,000.
C) $5,000.
D) $2,500.