Share
Explore BrainMass

Optimal Quantity of Widgets

A firm sells 25,000 widgets annually that it purchases from a widget supplier for
$10 each. It costs the firm $62.50 in administrative costs to place an order for the
widgets and, on the average, costs $0.50 in carrying costs to maintain a widget in
inventory. What is the optimal quantity of widgets to be purchased in each order
from the widget supplier?

Solution Preview

A firm sells 25,000 widgets annually that it purchases from a widget supplier for
$10 each. It costs the firm $62.50 in administrative costs to place ...

Solution Summary

This solution is comprised of a detailed explanation to answer what is the optimal quantity of widgets to be purchased in each order from the widget supplier.

$2.19