A product has a demand of 4000 units per year. Ordering cost is $20 per order, and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost per year in total annual inventory (holding and ordering) costs. $1200 $800 $400 Cannot be determined because the unit price is not known. Zero; this is a class C item

the Annual inventory cost is $800.

Explanation:

The computation of the total annual inventory cost is given below:

Demand, D = 4000

Order cost, S = $ 20

Holding cost, H = $ 4

So,

EOQ = sqrt(2 ×D × S ÷ H)

= sqrt(2 × 4000 × 20 ÷  4)

= 200

Now

Annual inventory cost = Annual setup cost + Annual holding cost  

= (D ÷ Q × S) + (Q ÷ 2 × H)

= (4000 ÷ 200 × 20) + (200 ÷ 2 × 4)

= 400 + 400

= $800

hence, the Annual inventory cost is $800.

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the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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