To calculate the inventory holding cost for a particular flow unit, there are $2$ factors $($h and r$)$ applied to its unit cost $($C$.)$ How are these $2$ factors applied?

Question $5$ options:

Combined as a total ratio of the warehousing and handling expenses compared to the annual average inventory value.

Combined as independent variables where each is expressed as a $\%,$ associated with the company's physical holding costs, and opportunity cost.

Differentiated and optimized to minimize the element of total inventory cost for the period of time $($typically a year$).$

None of the above