A supermarket uses a supplier for its bottled water. The annual demand for this product is 24000 units. The supermarket purchases bottled water from its supplier at a price of $0.8 per bottle. The holding cost per of water per year is $0.4. The ordering cost for the supermarket is $80 per order and the lead time is 2 days. The company operates 250 days a year. The supermarket uses Economic Order Quantity model to manage its inventories. What is the average inventory?

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 2CE: Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each...
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A supermarket uses a supplier for its bottled water. The annual demand for this product is 24000
units. The supermarket purchases bottled water from its supplier at a price of $0.8 per bottle. The
holding cost per of water per year is $0.4. The ordering cost for the supermarket is $80 per order
and the lead time is 2 days. The company operates 250 days a year. The supermarket uses
Economic Order Quantity model to manage its inventories.
What is the average inventory?
Transcribed Image Text:A supermarket uses a supplier for its bottled water. The annual demand for this product is 24000 units. The supermarket purchases bottled water from its supplier at a price of $0.8 per bottle. The holding cost per of water per year is $0.4. The ordering cost for the supermarket is $80 per order and the lead time is 2 days. The company operates 250 days a year. The supermarket uses Economic Order Quantity model to manage its inventories. What is the average inventory?
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