Problem 7-14 Economic ordering quantity [LO7-5]

Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 50,000 units per year, an ordering cost of $1 per order, and carrying costs of $1.60 per unit.

a. What is the economic ordering quantity?

b. How many orders will be placed during the year?

c. What will the average inventory be?

d. What is the total cost of ordering and carrying inventory?