A gift shop sells Little Lentils dolls at a steady pace of 10 per day, 310 days per year. The cost of the dolls is $5, and the gift shop uses an annual interest rate of 20 percent to compute holding cost. Question 1: Assuming an order quantity of 250 dolls and the cost of placing an order of $10, what is the average annual ordering cost (cost to place orders, not purchasing cost)?  Question 2:  Assuming an order quantity of 250 dolls, what is the average annual inventory holding cost?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A gift shop sells Little Lentils dolls at a steady pace of 10 per day, 310 days per year. The cost of the dolls is $5, and the gift shop uses an annual interest rate of 20 percent to compute holding cost.

Question 1: Assuming an order quantity of 250 dolls and the cost of placing an order of $10, what is the average annual ordering cost (cost to place orders, not purchasing cost)? 

Question 2:  Assuming an order quantity of 250 dolls, what is the average annual inventory holding cost?

 

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