Karloff Medical Supply maintains an average inventory of 2,000 human skulls for sale to medical schools and filmmakers. The carrying cost per skull per year is estimated to be $5. Boris places an order for 10,000 skulls on the first of each month and the order cost is $75. What are the total restocking costs under the current system?

Question

Quizplus · Accepted Answer

The total restocking cost is calculated by multiplying the number of orders per year by the order cost. Since Boris orders 10,000 skulls each month, he places 12 orders per year. Therefore, the total restocking cost is 12 orders * $75 per order = $900.

Karloff Medical Supply Maintains an Average Inventory of 2,000 Human