The correct answer is: A. relevant carrying cost.
The reorder point is the level of inventory at which a new order should be placed. It is calculated by taking into account the lead time, the daily demand, and the safety stock. The lead time is the time it takes to receive an order after it is placed. The daily demand is the number of units sold per day. The safety stock is the amount of inventory that is kept on hand to protect against unexpected demand or delays in delivery.
The relevant carrying cost is the cost of holding inventory. It includes the cost of storage, the cost of obsolescence, and the cost of capital. The relevant ordering cost is the cost of placing an order. It includes the cost of the order itself, the cost of transportation, and the cost of receiving the order.
The purchase order lease time is the length of time that a purchase order is valid. It is usually set by the supplier and is typically 30 days. The number of purchase orders is the number of orders that are placed in a given period of time. It is calculated by dividing the total number of units sold by the reorder point.
Here is a table that summarizes the different options:
| Option | Description |
|—|—|
| A. relevant carrying cost | The cost of holding inventory. It includes the cost of storage, the cost of obsolescence, and the cost of capital. |
| B. relevant ordering cost | The cost of placing an order. It includes the cost of the order itself, the cost of transportation, and the cost of receiving the order. |
| C. purchase order lease time | The length of time that a purchase order is valid. It is usually set by the supplier and is typically 30 days. |
| D. number of purchase orders | The number of orders that are placed in a given period of time. It is calculated by dividing the total number of units sold by the reorder point. |