Statements are true for the economic order quantity

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Reference no: EM131436017

For an inventory item, suppose the demand is 1200/month, lead time is 0.52 weeks, and safety stock is 5. The item cost is $16, the unit ordering cost is $40/order, and the unit carrying cost is $0.80/item/quarter.

How many of the statements are true for the economic order quantity in this problem?

(A) 0 (B) 1 (C) 2 (D) 3 (E) 4

Statement 1. The total annual ordering cost (TOC) is $960

Statement 2. The total annual carrying cost (TCC) is $960

Statement 3. The total annual cost (TC) is $232320

Statement 4. The total carrying cost for safety stock during three inventory periods is $2.00.

Reference no: EM131436017

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