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

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Definitions:

Rotor Bars

Metal bars mounted in the rotor of an induction motor, which conduct current and create a magnetic field that interacts with the stator to produce torque.

Induce Voltage

The process by which a voltage is generated in a conductor by changing the magnetic field around it.

Constant Speed

Maintaining a uniform speed regardless of load or other external conditions.