Item X is a standard item stocked in a company\'s inventory of component parts.

Question

Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 2,700 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more item X, it costs $20.

a. Whenever item X is ordered, what should the order size be? (Round your answer to the nearest whole number.)

b. What is the annual cost for ordering item X? (Round your answer to 2 decimal places.)

c. What is the annual cost for storing item X? (Round your answer to 2 decimal places.)

Explanation / Answer

Answer:

Part 1:

Part 2:

Part 3:

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.