Item x is a standard item stocked in a companyrsquos, Ask an Expert

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Item X is a standard item stocked in a company’s inventory of component parts. Each year the fi rm, on a random basis, uses about 2,000 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory.

Every time an order is placed for more of item X, it costs $10.

a. Whenever item X is ordered, what should the order size be?

b. What is the annual cost for ordering item X?

c. What is the annual cost for storing item X?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91702928

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