A moped manufacturing company needs 100,000 units of moped tires for its production per year.The carrying costs of these tires are 10 per unit per year. Fixed ordering cost is 400. What is the optimal number of units should the company order each time in order to minimize total inventory cost? At this optimal quantity, how often should the company order its moped tires? Assume a 365-day year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A moped manufacturing company needs 100,000 units of moped tires for its production per
year. The carrying costs of these tires are 10 per unit per year. Fixed ordering cost is 400.
What is the optimal number of units should the company order each time in order to minimize total
inventory cost? At this optimal quantity, how often should the company order its moped tires?
Assume a 365-day year.
Transcribed Image Text:A moped manufacturing company needs 100,000 units of moped tires for its production per year. The carrying costs of these tires are 10 per unit per year. Fixed ordering cost is 400. What is the optimal number of units should the company order each time in order to minimize total inventory cost? At this optimal quantity, how often should the company order its moped tires? Assume a 365-day year.
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