A Product Has a Demand of 4000 Units Per Year

Multiple Choice

A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost ________ per year in total annual inventory (holding and setup) costs.

A) $400
B) $800
C) $1200
D) Zero; this is a class C item.
E) Cannot be determined because the unit price is not known.