Answer:
C. Greater than $6 but not greater than $9
Explanation:
The computation of the unit holding cost per year is shown below:
As we know that
[tex]Economic\ order\ quantity = \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
where,
Annual demand is 450 × 52 weeks = 23,400 units
Ordering cost is $35 per order
Economic order quantity is 468 units
Now placing these values to the above formula
[tex]468\ units = \sqrt{\frac{2\times \text{23,400}\times \text{\$35}}{\text{Carrying\ cost}}}[/tex]
Now to find out the carrying cost, the calculation is given below:
= (2 × 450 units × $35) ÷ 468^2
= $7.48 per unit
The carrying cost is also known as holding cost
