The I-75 Carpet Discount Store has an annual demand of 10,000 yards of Super Shag carpet. The annual carrying cost for a yard of this carpet is $0.75, and the ordering cost is $150. The carpet manufacturer normally charges the store $8 per yard for the carpet; however, the manufacturer has offered a discount price of $6.50 per yard if the store will order 5,000 yards. How much should the store order, and what will be the total annual inventory cost for that order quantity?
The I-75 Carpet Discount Store has an annual demand of 10,000 yards of Super Shag carpet. The annual carrying cost for a yard of this carpet is $0.75, and the ordering cost is $150. The carpet manufacturer normally charges the store $8 per yard for the carpet; however, the manufacturer has offered a discount price of $6.50 per yard if the store will order 5,000 yards. How much should the store order, and what will be the total annual inventory cost for that order quantity?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The I-75 Carpet Discount Store has an annual demand of 10,000 yards of Super Shag carpet. The
annual carrying cost for a yard of this carpet is $0.75, and the ordering cost is $150. The carpet
manufacturer normally charges the store $8 per yard for the carpet; however, the manufacturer
has offered a discount price of $6.50 per yard if the store will order 5,000 yards. How much
should the store order, and what will be the total annual inventory cost for that order quantity?
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