A car rental agency uses 96 boxes of staples a year. The boxes cost $4 each. It costs $20 to order staples, and carrying costs are $0.80 per box on an annual basis.

1. Determine the annual cost of ordering and carrying the boxes of staples.

A. $55

B. $48

C. $196

D. $69

E. $20

The correct answer is $55.42.

Explanation:

According to the scenario, the computation of the given data are as follows:

Boxes use = 96 boxes

Cost = $4 per box

Staple cost = $20

Carrying cost = $0.80

So, we can calculate the annual cost of ordering and carrying by using following formula:

Annual cost = (EOQ ÷ 2) × Carrying cost + (Boxes use ÷ EOQ) × Staple cost

Where, EOQ = ( 2 × 96 × 20 ÷ 0.80)^1/2 = 69.28

So, by putting the value, we get

Annual cost = ( 69.28 ÷ 2) × $0.80 + ( 96 ÷ 69.28) × $20

= $27.71 + $27.71

= $55.42

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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