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What is the minimum feasible total cost of inventory

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Reference no: EM132761053

Question - The Wood Furniture company produces a specialty wood furniture product, and has the following information available concerning its inventory items:

Relevant ordering costs per purchase order $300

Relevant carrying costs per year:

Required annual return on investment 10%

Required other costs per year $2.80

Annual demand is 20,000 packages per year. The purchase price per package is $32.

1. What is the economic order quantity?

a. 789 units

b. 1,429 units

c. 1,356 units

d. 1,415 units

2. What is the minimum feasible total cost of inventory?

a. $7,414

b. $8,490

c. $6,243

d. $8487

Reference no: EM132761053

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