Av city stocks and sells a particular brand of laptop it
Course:- Accounting Basics
Reference No.:- EM13601448

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AV City stocks and sells a particular brand of laptop. It costs the firm $625 each time it places an order with the manufacturer for the laptops. The cost of carrying one laptop in inventory for a year is $130. The store manager estimates that total annual demand for the laptops will be 1500 units, with a constant demand rate throughout the year. Orders are received within minutes after placement from a local warehouse maintained by the manufacturer. The store policy is never to have stockouts of the laptops. The store is open for business every day of the year except Christmas Day. Determine the following:

• a.Optimal order quantity per order
• b.Minimum total annual inventory costs
• c.The number of orders per year
• d.The time between orders (in working days)

The Sofaworld Company purchases upholstery material from Barrett Textiles. The company uses 45,000 yards of material per year to make sofas. The cost of ordering material from the textile company is $1,500 per order. It costs Sofaworld $0.70 per yard annually to hold a yard of material in inventory. Determine the optimal number of yards of material Sofaworld should order, the minimum total inventory cost, the optimal number of orders per year, and the optimal time between orders.

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