21-2. Globe Inc. is a distributor of DVDs. DVD Mart is a local retail outlet which sells blank and recorded DVDs. DVD Mart purchases DVDs from Globe at $28.00 per DVD; DVDs are shipped in packages of 68. Globe pays all incoming freight, and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality. Annual demand is 320,000 DVDs at a rate of 6,900 DVDs per week. DVD Mart earns 13% on its cash investments. The purchase-order lead time is one week. The following cost data are available: Relevant ordering costs per purchase order $119.50 Carrying costs per package per year: Relevant insurance, materials handling, breakage, etc., per year What is the economic order quantity (EOQ)? $5.50 A) 67.41 packages B) 47.14 packages C) 6.10 packages D) 66.67 packages OA OB O C OD

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 4P: A large retailer obtains merchandise under the credit terms of 1/15, net 45, but routinely takes 60...
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21-2. Globe Inc. is a distributor of DVDs. DVD Mart is a local retail outlet which
sells blank and recorded DVDs. DVD Mart purchases DVDs from Globe at
$28.00 per DVD; DVDs are shipped in packages of 68. Globe pays all incoming
freight, and DVD Mart does not inspect the DVDs due to Globe's reputation for
high quality. Annual demand is 320,000 DVDs at a rate of 6,900 DVDs per week.
DVD Mart earns 13% on its cash investments. The purchase-order lead time is
one week. The following cost data are available:
Relevant ordering costs per purchase order $119.50
Carrying costs per package per year:
Relevant insurance, materials handling,
breakage, etc., per year
What is the economic order quantity (EOQ)?
$5.50
A) 67.41 packages
B) 47.14 packages
C) 6.10 packages
D) 66.67 packages
OA
OB
O C
OD
Transcribed Image Text:21-2. Globe Inc. is a distributor of DVDs. DVD Mart is a local retail outlet which sells blank and recorded DVDs. DVD Mart purchases DVDs from Globe at $28.00 per DVD; DVDs are shipped in packages of 68. Globe pays all incoming freight, and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality. Annual demand is 320,000 DVDs at a rate of 6,900 DVDs per week. DVD Mart earns 13% on its cash investments. The purchase-order lead time is one week. The following cost data are available: Relevant ordering costs per purchase order $119.50 Carrying costs per package per year: Relevant insurance, materials handling, breakage, etc., per year What is the economic order quantity (EOQ)? $5.50 A) 67.41 packages B) 47.14 packages C) 6.10 packages D) 66.67 packages OA OB O C OD
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