Reference no: EM132932028

Good Fit Inc, a spot goods chain store, sells an average of 1,000 bicycles each summer (90 days). Carrying cost per bicycle averages $20 and the cost of placing an order is $100. The company feels that a minimum of 50 units should be kept at all times to avoid stock out. The wholesaler, who supplies Good Fit with all its bicycle needs, has offered the following pricing schedule:

Order size in units Price per unit

Less than 199

$150200 to 499

$145500 to 799$140

Above 800$138

Problem 1: The total inventory cost including the cost to purchase inventory at the EOQ is:

Select one:
a. $ 147,000
b. $ 149,000
c. $ 151,000
d. $ 153,000
e. $ 157,000

Problem 2:  The lowest overall cost including the cost to purchase inventory is to order X bicycles per order. The value of X is:

Select one:
a. X = EOQ
b. X = 200
c. X = 500
d. X = 800
e. X = 1,000

Problem 3: If Good Fit wants a gross profit margin of 15% on the sales of its bicycles, then the selling price per bicycle has to be:
Gross profit margin = ( selling price - cost ) / Price

Select one:
a. $ 176
b. $ 172
c. $ 155
d. $ 168
e. $ 165