An Office Supply Company Is Attempting to Determine the Order

question 68

Essay

An office supply company is attempting to determine the order quantity for Mt.White fountain pens which are sold to local executives.Annual demand is 5,000 units and each pen costs the store $50.It costs $75 to place an order and the inventory carrying cost rate is 30% of the value of the item.
What values should go in cells B3:B11 of the spreadsheet for this problem if Q = 223.61?
$$\begin{array} { | c | c | c | } \hline & \text { A } & \text { B } \\\hline 1 & & \\\hline 2 & & \\\hline 3 & \text { Annual Demand: } & \\\hline 4 & & \\\hline 5 & \text { Cost per Unit: } & \\\hline 6 & \text { Ordering Cost: } & \\\hline 7 & \text { Carying Cost: } & \\\hline \mathbf { 8 } & & \\\hline 9 & \text { Order Quantity: } & \\\hline 10 & & \\\hline 11 & \text { Total Cost: } & \\\hline\end{array}$$

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Definitions:

Fixed Costs

Stable costs encompassing rent, salaries, and insurance, unaffected by variations in production or sales levels.

Break-Even

The point where overall expenses match overall income, leading to neither a profit nor a loss.

Variable Costs

Expenditures that adjust according to the quantity of goods or services produced by an enterprise.

Fixed Costs

Regular outgoings that stay the same whether production or sales rates increase or decrease, for instance, rental costs or salary payments.