Silver Screen Company is a distributor of videotapes. Kilo Video Rental Company is a local...
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Silver Screen Company is a distributor of videotapes. Kilo Video Rental Company is a local retail outlet which sells blank and recorded videos. Kilo Video Rental Company purchases tapes from Silver Screen Company at 5.00 per tape; tapes are shipped in packages of 25. Silver Screen Company pays all incoming freight, and Kilo Video Rental Company does not inspect the tapes due to Silver Screen Company's reputation for high quality. Annual demand is 104,000 tapes at a rate of 2,000 tapes per week. Kilo Video Rental Company earns 15% on its cash investments. The purchase- order lead time is one week. The following cost data are available: Relevant ordering costs per purchase order 94.50 Carrying costs per package per year: Relevant insurance, materials handling, breakage, etc., per year 3.50 What is the annual total costs of inventory management? a. 6,150.50 b. 4,182.56. c. 2,560.20. d. 1,951.70
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