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1. Which one of the following factors is not considered when calculating H, holding cost per unit per unit time?
a. Depreciation
b. Rent
c. Demand
d. Opportunity Cost
e. Insurance
2. A toy manufacturer uses approximately 32,000 slicon chips annually. The chips are used at a steady rate during the 240 days a year that the plant operates. Annual holding cost is $3 per slicon chip. The optimal ordering quantity is 1600 chips per order. What is the assumed ordering cost, i.e. S ?
a. 0.075
b. 120
c. Enough information is not given.
d. 240
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An analysis of the holding costs, including the appropriate annual holding cost rate.
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