An Office Supply Company Is Attempting to Determine the Order

question 43

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.
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Formulate the objective function for this problem. Let Q indicate the order quantity.

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Definitions:

Credit Memo

A document issued by a seller to a buyer, reducing the amount the buyer owes to the seller under previous transactions, often due to a return or refund.

Perpetual Inventory System

A technique in inventory management accounting that captures sales or purchases right away using computerized systems for point-of-sale and software for enterprise asset management.

Credit Card Fees

Credit card fees are charges levied by credit card companies for the processing of transactions, maintenance of accounts, or penalties for late payments.

Perpetual Inventory System

An accounting method that continuously updates the quantity and cost of inventory after each purchase or sale, offering real-time inventory levels.