c. What is the annual cost for storing item X? Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places. Holding cost 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 2,600 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $7 per unit of average inventory. Every time an order is placed for more of item X, it costs $26. a. Whenever item X is ordered, what should the order size be? Note: Round your answer to the nearest whole number. Order size b. What is the annual cost for ordering item X? Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places. Ordering cost

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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c. What is the annual cost for storing item X?
Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places.
Holding cost
Transcribed Image Text:c. What is the annual cost for storing item X? Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places. Holding cost
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
2,600 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $7 per unit of average
inventory. Every time an order is placed for more of item X, it costs $26.
a. Whenever item X is ordered, what should the order size be?
Note: Round your answer to the nearest whole number.
Order size
b. What is the annual cost for ordering item X?
Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places.
Ordering cost
Transcribed Image Text: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 2,600 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $7 per unit of average inventory. Every time an order is placed for more of item X, it costs $26. a. Whenever item X is ordered, what should the order size be? Note: Round your answer to the nearest whole number. Order size b. What is the annual cost for ordering item X? Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places. Ordering cost
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