2B5W PAINT CORPORATION EXPECTS TO USE 48,000 GALLONS OF PAINT PER YEA...
165.
CSO: 2B5e
LOS: 2B5w
Paint Corporation expects to use 48,000 gallons of paint per year costing $12 per gallon.
Inventory carrying cost is equal to 20% of the purchase price. The company uses its
inventory at a constant rate. The lead time for placing the order is 3 days, and Paint
Corporation holds 2,400 gallons of paint as safety stock. If the company orders 2,000
gallons of paint per order, what is the cost of carrying inventory?
a.
$2,400.
b.
$5,280.
c.
$5,760.
d.
$8,160.