Charlotte sells widget that cost $50 each to purchase and prepare for sale. Annual demand is 10,000 widgets, carrying costs are 15% of inventory costs, and Charlotte incurs a cost of $25 each time an order is placed. Suppose that Charlotte's supplier decides to offer a 3% cash discount if products are ordered in increments of 1250. How many widgets should Charlotte order each time an order is placed to minimize total inventory costs?
Charlotte sells widget that cost $50 each to purchase and prepare for sale. Annual demand is 10,000 widgets, carrying costs are 15% of inventory costs, and Charlotte incurs a cost of $25 each time an order is placed. Suppose that Charlotte's supplier decides to offer a 3% cash discount if products are ordered in increments of 1250. How many widgets should Charlotte order each time an order is placed to minimize total inventory costs?
Chapter15: Managing Short-term Assets
Section: Chapter Questions
Problem 19PROB
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Charlotte sells widget that cost $50 each to purchase and prepare for sale. Annual demand is 10,000 widgets, carrying costs are 15% of inventory costs, and Charlotte incurs a cost of $25 each time an order is placed. Suppose that Charlotte's supplier decides to offer a 3% cash discount if products are ordered in increments of 1250. How many widgets should Charlotte order each time an order is placed to minimize total inventory costs?
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