Answered

Join the conversation on IDNLearn.com and get the answers you seek from experts. Get comprehensive answers to all your questions from our network of experienced experts.

Warren Enterprises expects 20,000 unit sales, has ordering costs of $20 per order, carrying costs of $1.00 per unit, and desires to keep 100 units in safety stock. Assuming level production, what should be their average inventory? a. 200-300 b. 301-400 c. 401-500 d. 501-600

Sagot :

Cricetusidn

Answer:

Option d (501-600) is the correct answer.

Explanation:

Given:

Unit sales,

= 20,000

Ordering costs,

= $20

Carrying costs,

= $1

Safety stocks,

= 100

Now,

The EOQ will be:

= [tex]\sqrt{\frac{2\times Unit \ sales\times Ordering costs}{Carrying \ costs} }[/tex]

By putting the values, we get

= [tex]\sqrt{\frac{2\times 20000\times 20}{1} }[/tex]

= [tex]\sqrt{800000}[/tex]

= [tex]894.43 \ units[/tex]

hence,

The average inventory will be:

= [tex][Safety \ stock +(\frac{EOQ}{2} )][/tex]

= [tex][100+(\frac{894.43}{2} )][/tex]

= [tex][100+447.21][/tex]

= [tex]547.21[/tex] (lies between 501-600)

Thus the above is the correct response.

Thank you for joining our conversation. Don't hesitate to return anytime to find answers to your questions. Let's continue sharing knowledge and experiences! Find clear answers at IDNLearn.com. Thanks for stopping by, and come back for more reliable solutions.