Throughout the year an auto parts warehouse places several orders for a high-volume automobile air filter. The demand for this air filter is very stable (flat) and the lead time from the supplier is very reliable (no variation), consequently the warehouse holds virtually no safety stock for this item. When placing orders for this air filter the warehouse uses an order quantity of 170 units and pays an annual holding cost of $2.00 per unit per year. How much will the warehouse pay in total annual holding costs for this air filter? (Display your answer to the nearest whole number.)

$170

Explanation:

The amount that the warehouse will pay in total annual holding costs for this air filter will be calculated thus:

Order quantity(Q) = 170 units

Holding cost(H) = $2.00 per unit per year

Total annual holding cost will be:

= (Order quantity/2) × Holding cost

= (170/2) × 2.00

= 85 × 2.00

= $170

The annual holding cost is $170

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

answer; (cash) is the best out of the above; good luck