The Manager of the Quick Stop Corner Convenience Store (Which

question 5

Multiple Choice

The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $0.80 per six-pack (each case of Stein beer contains four six-packs) . Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer.
At what point should he reorder Stein beer?

• A)0 cases remaining
• B)4 cases remaining
• C)12 cases remaining
• D)16 cases remaining
• E)20 cases remaining

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Definitions:

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis, reflecting the opportunity cost of capital.

Drive Axle

An axle that is connected to the drive train and responsible for transferring power from the engine to the wheels.

Ring Gear

Spur gear such as that used on a flywheel for engine cranking, or the outer member of a planetary gearset.

Differential Case

The outer housing that encloses the differential mechanism in a vehicle, protecting its gears and components.