Subjects operations management

Annual Holding Cost

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Annual Holding Cost


1. **Problem Statement:** Calculate the total annual holding cost for an auto parts warehouse that orders 220 units of an air filter with an annual holding cost of 1.50 per unit. 2. **Formula Used:** The total annual holding cost is calculated as: $$\text{Total Holding Cost} = \text{Order Quantity} \times \text{Holding Cost per Unit}$$ 3. **Given Values:** - Order Quantity $Q = 220$ units - Holding Cost per Unit $H = 1.50$ 4. **Calculation:** $$\text{Total Holding Cost} = 220 \times 1.50 = 330$$ 5. **Interpretation:** The warehouse will pay 330 in total annual holding costs for this air filter. **Final Answer:** $$\boxed{330}$$