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Which of the following will be annual optimum cost of a product if thenumber of annual orders without any shortage is 25 and the total cpst of onecycle is 10,000? Rs.400 Rs.10025 Rs.9975 Rs.250000

Question

Which of the following will be annual optimum cost of a product if thenumber of annual orders without any shortage is 25 and the total cpst of onecycle is 10,000? Rs.400 Rs.10025 Rs.9975 Rs.250000

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Solution

The annual optimum cost of a product can be calculated by multiplying the total cost of one cycle by the number of annual orders.

Here, the total cost of one cycle is Rs. 10,000 and the number of annual orders is 25.

So, the annual optimum cost = Total cost of one cycle * Number of annual orders = Rs. 10,000 * 25 = Rs. 250,000

So, the annual optimum cost of the product is Rs. 250,000.

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