Block, S., Hirt, G., & Danielsen, B. (2017). Foundations of Financial Management. New York, NY: McGraw-Hill Education. 16th edition. Chapter 7 - Problem #14 Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 49,000 units per year, an ordering costs of $8 per order, and carrying costs of $1.60 per unit.  In the second year, Fisk Corporation finds that it can reduce ordering costs to $2 per order but that carrying costs stay the same at $1.60 per unit.  Also, volume remains at 49,000 units per year. A. What is the economica ordering quantity? B. How many orders will be placed during the year? C. What will the average inventory be? D. What is the total costs of ordering and carrying inventory? Thank you in advance!

Question

Block, S., Hirt, G., & Danielsen, B. (2017). Foundations of Financial Management. New York, NY: McGraw-Hill Education. 16th edition.

Chapter 7 - Problem #14

Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 49,000 units per year, an ordering costs of $8 per order, and carrying costs of $1.60 per unit.  In the second year, Fisk Corporation finds that it can reduce ordering costs to $2 per order but that carrying costs stay the same at $1.60 per unit.  Also, volume remains at 49,000 units per year.

A. What is the economica ordering quantity?

B. How many orders will be placed during the year?

C. What will the average inventory be?

D. What is the total costs of ordering and carrying inventory?


Thank you in advance!

 

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