Q83

Dears, could you please help on task below: "Company forecasts that demand for Product KN5 will be 160 000 units in the coming year and it has traditionally ordered 10% of annual demand per order.The ordering costs is expexting to be 400$ per order while the holding costs is expected to be 5,12 $ per unit per year. A buffer Inventory of 5000 units " of Product KN5 will be maintained, whether orders are made by the traditional method or using the economic order quantity model. The answer Average inventory = 5000+ 16 000/2 = 13 000 Holding cost of average inventory = 13 000 * 5,12 = 66 560 per year Question It is not clear why average cost was calculated as 16 000/ 2 ??? In my understanding it should be as 16 000 * 10/12