Use in order to minimize its current inventory costs

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Reference no: EM132245853

The Strait Corporation is a manufacturer of Compact Disks [CD’s] located in Memphis, Tennessee. It is evaluating its current costs for handling a specific CD by a famous country singer, George Bent. The demand for this CD averages 50,000 CDs per year. The CD costs Strait $ 4.00 to manufacture at its plant. The setup costs for the machine that produces the CD’s are $ 550; it is capable of producing up to 35,000 CD’s per month. The company has a inventory cost (cost of capital) of 22% per annum.

a) What is the current lot size that Strait should use in order to minimize its current inventory costs?

(a) 7810

(b) 1216

(d) 12076

(e) 4800

b) What would be their total inventory costs?

(a) $6,529.79

(b) $3,264.09

(d) $24,650.18

(e) $2,581.49

Reference no: EM132245853

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