A mail-order house uses 18,000 boxes a year. Carrying costs are 60 cents per box a...

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Accounting

A mail-order house uses 18,000 boxes a year. Carrying costs are60 cents per box a year, and ordering cost are $96. the follingprice schedule applies.
Number of boxes Price per box
1,000 to 1,999 $1.25
2,000 to 4,999 1.20
5,000 to 9,999 1.15
10,000 or more 1.10
A. What is the maximum level of inventory the company would haveto plan for?
B. what is the average level of inventory the company would haveto plan for?
C. Calculate the days of inventory metric for this company(assume a 365 day work year).

Answer & Explanation Solved by verified expert

3.8 Ratings (380 Votes)

A mail order house uses D 18000 boxes per year The carrying cost H 60 per yr The odering cost S 96 aThe optimal rdering quantity q Square Root 2DSH Square Root 218000 boxes 966 Sqaure Root 34560006 2400 boxes There fore See Answer

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Number of boxes	Price per box
1,000 to 1,999	$1.25
2,000 to 4,999	1.20
5,000 to 9,999	1.15
10,000 or more	1.10