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Accounting: Inventory management.

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Please help with the following problem regarding inventory management.

The Acme Grocery store started a Coupons Instantly program. It requires a debit card with a minimum of $300, so the customer can buy as many coupons as they want. As a promotional gimmick they are offering pens. The pens are given away to new coupon holders. The additional pens needed have become a problem for inventory. The manager estimates:
D=700 pens per year
HC=$4 per pen per year
OC = $30 per order
a. How many pens should the manager order at one time?>
b. For the optimal order quantity, figure out the total inventory cost for the year.

Jennifer thinks she sells 800 pairs of shoes annually. Estimated HC is 30 per pair, and OC is $20/order.

a.what is total inventory cost/year?
b. how many orders are there(#of orders)?
c. what is optimal order quantity?
d, graphically show inventory pattern.

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Solution Summary

The problem deals with estimating holding cost, economic order quantity and other costs, for inventory, from provided information.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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