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

question 134

Multiple Choice

Aberwald Corporation
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 cost is equal to 20 percent of the purchase price. (Assume a 360-day year.)
-Refer to Aberwald Corporation.What is the economic ordering quantity for chips?

• A) 12,088
• B) 3,175
• C) 6,243
• D) 13,675
• E) 2,245

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Definitions:

Standard Deviation

A measure of the dispersion of a set of data from its mean, indicating how spread out the data points are.

Expected Return

The average return an investor anticipates receiving on an investment, considering all potential outcomes.

Expected Return

The potential return on an investment, taking into account both the probability of gains and the risk of loss.

Portfolio

A diversified collection of investments held by an individual or institution, including stocks, bonds, real estate, and other assets.