Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I need help. please arrange answers in TABLE FORM ONLY, just like the question for easy understanding.Thanks. (question 5ii) Gwen Pet Supplies purchases its inventory
I need help. please arrange answers in TABLE FORM ONLY, just like the question for easy understanding.Thanks.
(question 5ii)
Gwen Pet Supplies purchases its inventory from a variety of suppliers, some of which require a six-week lead time before delivering the goods. To ensure that she has a sufficient supply of goods on hand, Ms. Leblanc, the owner, must maintain a large supply of inventory. The cost of this inventory averages $67,000. She usually finances the purchase of inventory and pays a 5 percent annual finance charge. Ms. Leblanc's accountant has suggested that she establish a relationship with a single large distributor who can satisfy all of her orders within a two-week time period. Given this quick turnaround time, she will be able to reduce her average inventory balance to $17,000. Ms. Leblanc also believes that she could save $9,000 per year by reducing phone bills, insurance, and warehouse rental space costs associated with ordering and maintaining the larger level of inventor) Required b. Based on the information provided, how much of Ms. Leblanc's inventory holding cost could be eliminated by taking the accountant's advice? Eliminated inventory holding cost
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started