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Barker makes purchasing decisions for his company. One product that he buys cost $50 per unit when the order quntity is less than 500.

R.C. Barker makes purchasing decisions for his company. One product that he buys cost $50 per unit when the order quntity is less than 500. When the quantity ordered is more than 500 or more, the price per unit drops to $48. The ordering cost $30 per order and and the annual demand is 7,500 units. The hoding cost is 10 percent of the purchase cost. if the R.C. orders 500 units each time he places an order, what would the total annual holding cost be?

A. $450
B. $1,200
C. $1,250
D. $2,400
E. none of above

Top Answer

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554161_FIN.docx

The annual holding cost at EOQ=500 units
Answer:
$1200

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