Corporation resells one product to a small isolated community. It sells an average of 60 sacks, but may sell as low as 20 sacks and as high as 75 sacks each day. The supplier charges P500 per sack and an additional fixed cost of P1,300 for deliveries. It takes an average of ten days for orders to arrive. Investment in inventory are funded thru debt and equity at a weighted average cost of capital of 14%. How much would the minimum total annual inventory-related costs that KK would incur if it applies the reorder point and EOQ models? Use 365 days
Corporation resells one product to a small isolated community. It sells an average of 60 sacks, but may sell as low as 20 sacks and as high as 75 sacks each day. The supplier charges P500 per sack and an additional fixed cost of P1,300 for deliveries. It takes an average of ten days for orders to arrive. Investment in inventory are funded thru debt and equity at a weighted average cost of capital of 14%. How much would the minimum total annual inventory-related costs that KK would incur if it applies the reorder point and EOQ models? Use 365 days
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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KK Corporation resells one product to a small isolated community. It sells an average of 60 sacks, but may sell as low as 20 sacks and as high as 75 sacks each day. The supplier charges P500 per sack and an additional fixed cost of P1,300 for deliveries. It takes an average of ten days for orders to arrive. Investment in inventory are funded thru debt and equity at a weighted average cost of capital of 14%. How much would the minimum total annual inventory-related costs that KK would incur if it applies the reorder point and EOQ models? Use 365 days.
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