Answer:
b. Annual holding cost, annual ordering cost, annual purchasing cost
Explanation:
The fixed order quantity total cost function is an economic order quantity model which comprises of annual holding cost, annual ordering cost and the purchasing cost
The formula to compute economic order quantity is shown below:
= [tex]\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
The number of orders would be equal to
= Annual demand ÷ economic order quantity
The average inventory would equal to
= Economic order quantity ÷ 2
d. The total cost of ordering cost and carrying cost equals to
Ordering cost = Number of orders × ordering cost per order
Carrying cost = average inventory × carrying cost per unit
Purchasing cost = Annual demand × price per unit
Thus, the b option is correct
