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A firm expects to sell 10,000 units of its product annually. It estimates that it costs $200 to place an order and that each unit costs $7 annually to carry in inventory. It takes 7 days to receive an order once it is placed, and the store is open 365 days per year.

a) How many units should the firm order at a time if it wants to minimize the sum of ordering and carrying costs?

b) How many orders will it place in a year?

c) What will its average inventory level be during the year?

d) What is its reorder point?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9410838

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