bpp revision kit page 24

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April 10, 2017 at 3:41 am #380740
fatinfyusuf
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Question no. 6.8 it was told that the demand for a product is 12,500 units for a three month period. Each unit of product has a purchase price of $15 and ordering costs are $20 per order placed. The annual holding cost is 10% of its purchase price. Why is the answer like this : D = 12,500 × 4 = 50,000 instead of D = 12,500 × 3 = 37,500 ?
April 10, 2017 at 7:51 am #380755
John Moffat
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There are 12 months in a year, so 3 months is 1/4 of a year.

Therefore 12,500 in 3 months becomes 4 x 12,500 = 50,000 in a year.
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