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A. What is working capital management? [5 Marks] B. A bookstore in Ndola is attempting to determine the optimal order quantity for a popular book
A. What is working capital management? [5 Marks] B. A bookstore in Ndola is attempting to determine the optimal order quantity for a popular book on personal financial management. The store sells 5,000 copies of this book a year at a retail price of K125, and the cost to the store is 20 percent less, which represents the discount from the publisher. The store estimates that it costs K6 per year to carry a book in inventory and K350 to prepare an order for new books. Under the current policy, the bookstore makes 10 orders per year. I. What is the total inventory cost under the current ordering policy of the bookstore? [8 Marks] II. Determine the total inventory cost if the economic order quantity (EOQ) is adopted implemented per order. [10 Marks] III. What is the total cost implication of changing the ordering policy of the book to the EOQ? [2 Marks] [Total: 25 Marks]
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