Question

For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $400. What is the inventory carrying cost per unit per year for this item? $2.00 $3.00 $150.00 $1.00 not enough data to determine

Answer 1

$2 per unit per year

Step-by-step explanation:

The computation of the inventory carrying cost per unit per year is shown below:

Inventory Carrying cost per unit per year is

= Total Annual Inventory cost ÷ Economic order quantity

= $400 ÷ 200 units

= $2 per unit per year

By dividing the total annual inventory cost from the economic order quantity, the inventory carrying cost could come and the same is to be applied

Hence, the first option is correct