Your cousin’s business is up and running. She is meeting inventory management issues and wants to solve the repeated problem once and for all. Each period, her company starts with 350 metal bars in stock. This stock is depleted every two weeks and reordered. The calendar year is comprised of 52 weeks.It costs $1.50 to hold every metal bar over the year. Every order comes at a fixed cost (unloading, storage and record of receipt) of $300.00. a) Calculate the total annual carrying costs and the restocking costs b) Explain in few sentences why this business does not follow an economically advisable strategy
Your cousin’s business is up and running. She is meeting inventory management issues and wants to solve the repeated problem once and for all. Each period, her company starts with 350 metal bars in stock. This stock is depleted every two weeks and reordered. The calendar year is comprised of 52 weeks.It costs $1.50 to hold every metal bar over the year. Every order comes at a fixed cost (unloading, storage and record of receipt) of $300.00. a) Calculate the total annual carrying costs and the restocking costs b) Explain in few sentences why this business does not follow an economically advisable strategy
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Your cousin’s business is up and running. She is meeting inventory management issues and wants to solve the repeated problem once and for all. Each period, her company starts with 350 metal bars in stock. This stock is depleted every two weeks and reordered. The calendar year is comprised of 52 weeks.It costs $1.50 to hold every metal bar over the year. Every order comes at a fixed cost (unloading, storage and record of receipt) of $300.00.
a) Calculate the total annual carrying costs and the restocking costs
b) Explain in few sentences why this business does not follow an economically advisable strategy
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