The Soft Goods Department of a Large Department Store Sells

question 8

Essay

The soft goods department of a large department store sells 175 units per month of a certain large bath towel. The unit cost of a towel to the store is $2.50 and the cost of placing an order has been estimated to be $12.00. The store uses an inventory carrying charge of 27% per year. Determine the optimal order quantity, order frequency, and the annual cost of inventory management. If, through automation of the purchasing process, the ordering cost can be cut to $4.00, what will be the new economic order quantity, order frequency, and annual inventory management cost?
Explain these results.

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Definitions:

Shoplifted

The act of stealing merchandise from a retail establishment without paying for it.

Pressuring

The act of attempting to persuade or coerce someone into doing something, often leading to stress or discomfort.

Identity

The qualities, beliefs, personality traits, appearance, and/or expressions that define a person or group.

Hanging Out

Informal social gatherings or spending time with friends or acquaintances without a specific agenda or activity.