Medina Corporation uses a direct material, Zelda, in its production processes. The company uses 86,000 units of

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Medina Corporation uses a direct material, Zelda, in its production processes. The company uses 86,000 units of Zelda a year. The carrying costs of Zelda amount to

$25.00 per unit, while order costs are $325 per order. The manufacturer of Zelda will only accept orders in lots of even thousands.

What is the optimal order quantity and the annual inventory costs, given the restriction on order sizes?

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Cost Accounting

ISBN: 9780256257113

4th Edition

Authors: Michael W. Maher, Edward B. Deakin

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