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What is the investment in average inventory? (b) What is the annual ordering cost?

What is the investment in average inventory? (b) What is the annual ordering cost?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Abalos Appliance Store sells an average of 160 units per month. Each order the store places is for 300 units. The cost per unit is P5. The cost per order is P12. Carrying cost is P0.15 per dollar invested per year. The rate of return is 18 percent. The tax rate is 46 percent.

Requirement:

  • (a) What is the investment in average inventory?
  • (b) What is the annual ordering cost? 



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