Aberwald Corporation Expects to Order 126,000 Memory Chips for Inventory

question 9

Multiple Choice

Aberwald Corporation expects to order 126,000 memory chips for inventory during the coming year, and it will use this inventory at a constant rate. Fixed ordering costs are $200 per order; the purchase price per chip is $25; and the firm's inventory carrying costs is equal to 20 percent of the purchase price. (Assume a 360-day year.)
-If Aberwald holds a safety stock equal to a 30-day supply of chips, what is its average inventory level?

• A) 12,088
• B) 3,175
• C) 15,750
• D) 13,675
• E) 8,124

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Definitions:

Social Groups

A collection of individuals who interact with each other, share similar characteristics, and collectively have a sense of unity or identity.

Cognitive Algebra

An approach in psychology that considers how individuals mentally combine various factors to form judgments or decisions.

Weighted Averaging

Method of forming positive or negative impressions by first weighting and then averaging the valence of all the constituent person attributes.

Mental Calculations

The process of performing arithmetic operations without the use of external devices or tools, relying solely on the mind.