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The question:
“Monthly demand for a product is 10,000 units. The purchase price is
$10/unit and the company’s cost of finance is 15% pa. Warehouse storage costs per unit pa are $2/unit. The supplier charges $200 per order for delivery.”The holding cost is $3.50 ($10x 15% +2),the $1.50 is it the interest forgone?opportunity cost by holding one unit?Thank you.
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