Suppose You Tell Management at Cooper Company (In the Above

question 14

Multiple Choice

Suppose you tell management at Cooper Company (in the above two questions) it should raise safety stock to the six sigma level.If Cooper decides to do this,it will incur an additional inventory carrying cost of approximately how much?

• A)$2,160
• B)$234
• C)cannot be determined
• D)$1,566

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Definitions:

Cash Balances

Cash Balances are the amount of cash or cash equivalents that a company or an individual holds.

Transactions

The action of buying or selling in a business context, or the records of these actions.

Business Operations

The activities that businesses engage in on a day-to-day basis to increase the value of the enterprise and earn a profit.

EOQ

Economic Order Quantity, a formula used to determine the optimal quantity of inventory to order that minimizes total inventory costs.