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

question 99

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 its average inventory level?

• A) 1,588
• B) 3,175
• C) 1,123
• D) 13,675
• E) 8,124