A store sells a product that has the annual demand of 16,156 units. It purchases the product from supplier A for $74.4 per unit. The unit inventory carrying cost per year is 14 percent of the unit purchase cost. The cost to place and process an order from the supplier is $107 per order. Supplier A has a delivery lead time of 7 days. The store operates 300 days a year. Assume EOQ model is appropriate. What is the optimal total annual inventory and purchase cost for the store? Use at least 4 decimal places.

A store sells a product that has the annual demand of 16,156 units. It purchases the product from supplier A for $74.4 per unit. The unit inventory carrying cost per year is 14 percent of the unit purchase cost. The cost to place and process an order from the supplier is $107 per order. Supplier A has a delivery lead time of 7 days. The store operates 300 days a year. Assume EOQ model is appropriate. What is the optimal total annual inventory and purchase cost for the store? Use at least 4 decimal places.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A store sells a product that has the annual demand of 16,156 units. It purchases the product from
supplier A for
$74.4 per unit. The unit inventory carrying cost per year is 14 percent of the unit purchase cost.
The cost to
place and process an order from the supplier is $107 per order. Supplier A has a delivery lead time
of 7 days.
The store operates 300 days a year. Assume EOQ model is appropriate. What is the optimal total
annual
inventory and purchase cost for the store?
Use at least 4 decimal places.

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