Calhoun Corporation's order quantity for Material T is 5,000 lbs. The company maintains a safety stock of T at 500 lbs., and its order point is 1,500 lbs. Refer to Calhoun Corporation. What would be the total annual carrying costs assuming the carrying cost per unit is $0.20?
a. $1,000
b. $600
c. $100
d. $1,100
B
(5,000units/2) + 500 units = 3,000 units *$0.20/unit = $600
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