Fixed order placement-transportation and receiving cost

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Demand for the Desk Pro computer at Best Buy is fairly constant day-to-day at a rate of 1,000 units per month. Best Buy incurs a fixed order placement, transportation, and receiving cost of $4,000 each time an order is placed. Each computer costs Best Buy $500 and the retailer has an annual holding cost of 20% of the item’s value (i.e., 0.20*$500). If Best Buy orders 1,500 Desk Pro computers each time an order is placed then its average inventory would be

1,500 b. 1,000 c. 750 d. 500

Reference no: EM13964711

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