Question: Using the EOQ Model, Tokyo Company computed the economic order quantity for one of the materials it uses in its production to be 4,000 units.

Using the EOQ Model, Tokyo Company computed the economic order quantity for one of the materials it uses in its production to be 4,000 units. The Company maintains safety stock of 300 units. The quarterly demand for the material is 10,000 units. The order cost is 200 per order. The purchase price of the material is P4. The annual Inventory carrying cost is equal to 25% of the purchase price.

What is the annual inventory carrying cost?
The total inventory order cost per year is

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