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Question
Exhibit 28.3
Assume that Palmer Executive Pens uses 1,440,000 gallons of ink each year. Further, assume that Palmer can order the ink at a cost of $2 per gallon plus fixed ordering costs of $100 per order. The firm's carrying cost is 20 percent of the inventory value, at cost.
Refer to Exhibit 28.3. What is Palmer's minimum costs of ordering and holding inventory?
a. $6,254
b. $10,733
c. $11,560
d. $13,563
e. $19,825
Answer
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