Cindy's Toys Has an Average Inventory of 1,800 Teething Rings

question 288

Multiple Choice

Cindy's Toys has an average inventory of 1,800 teething rings. The carrying cost per unit per year is 5¢. Cindy places an order for 3,600 teething rings on the first of each month and the order cost is $25. What is the average inventory using the EOQ?

• A) 2,251 units
• B) 2,596 units
• C) 2,746 units
• D) 3,286 units
• E) 3,300 units

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Definitions:

Disbursement Float

The time lag between a payment being made by a company and the actual withdrawal of funds from the company's account.

Deposited

Placing money into a financial account or institution for safekeeping or investment purposes.

Collection Float

The time period between when a check is deposited and when the funds are available in the payee’s account, reflecting the bank’s processing time.