The correct answer is: B. annual relevant carrying costs
The annual relevant carrying costs are the costs that are incurred in order to keep inventory on hand. These costs include the cost of capital, storage costs, insurance costs, and obsolescence costs.
The annual relevant ordering costs are the costs that are incurred in order to place an order for inventory. These costs include the cost of the order itself, the cost of transportation, and the cost of receiving and inspecting the inventory.
The annual irrelevant carrying costs are the costs that are not incurred in order to keep inventory on hand. These costs include the cost of the warehouse space, the cost of the equipment used to store the inventory, and the cost of the employees who are responsible for storing the inventory.
The annual irrelevant ordering costs are the costs that are not incurred in order to place an order for inventory. These costs include the cost of the purchasing department, the cost of the marketing department, and the cost of the sales department.
The average inventory in units is multiplied with annual relevant carrying cost of each unit to calculate annual relevant carrying costs. This is because the annual relevant carrying costs are the costs that are incurred in order to keep inventory on hand, and the average inventory in units is the amount of inventory that is kept on hand on average.