Engineering Board Exam Reviewer · Engineering Management · hard
Annual demand is 12,000 units, ordering cost is ₱500/order and holding cost is ₱30/unit/year. What is the total annual inventory (ordering + holding) cost at the EOQ?
- ₱9,487
- ₱18,974
- ₱6,000
- ₱13,416
Answer
B. ₱18,974
Solution
At the EOQ, TC = √(2DSH) = 2 × 12,000 × 500 × 30 = ₱18,974 (ordering and holding costs are equal at ₱9,487 each).
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