document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1178940>Question 1178940</A>: <I><SPAN STYLE=\"word-break: break-all;\"> ABC Company sells 5,500 pens per year with a constant demand throughout the year. ABC <BR>\n" );
document.write( "purchases the pens at the cost of $300 per unit. Ordering cost for the company is S 100 per <BR>\n" );
document.write( "order. Holding cost for the company is S 10 per year. Currently the company is ordering the <BR>\n" );
document.write( "products in lots of 200 units. What would be the total holding cost for ABC?  </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #850281 by </B><A HREF=/tutors/aboutme.mpl?userid=CPhill><B>CPhill(1959)</B></A><img src=\"/images/stars/stars-12.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=CPhill><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=CPhill><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=850281\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Here's how to calculate the total holding cost for ABC Company:\r<BR>\n" );
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document.write( "**1. Calculate the Average Inventory:**\r<BR>\n" );
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document.write( "* The average inventory is half of the order quantity.<BR>\n" );
document.write( "* Average Inventory = Order Quantity / 2<BR>\n" );
document.write( "* Average Inventory = 200 units / 2 = 100 units\r<BR>\n" );
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document.write( "**2. Calculate the Total Holding Cost:**\r<BR>\n" );
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document.write( "* Total Holding Cost = Average Inventory * Holding Cost per Unit per Year<BR>\n" );
document.write( "* Total Holding Cost = 100 units * $10/unit = $1000\r<BR>\n" );
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document.write( "**Therefore, the total holding cost for ABC Company is $1000.**<BR>\n" );
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