A company orders a particular raw material in order quantities of 250 units. No safety inventory is held, the inventory holding cost is $3 per unit per annum and annual demand is 2500 units What is the total annual inventory holding cost of the material?
Added by Nieves H.
Step 1
First, we need to find the average inventory level. Since no safety inventory is held and the order quantity is 250 units, the average inventory level can be calculated as half of the order quantity: Average Inventory Level = Order Quantity / 2 = 250 / 2 = 125 Show more…
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