The manager of the Quick Stop Corner Convenience Store (which never closes)sells four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs $.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to 5 percent of the cost of the beer.
If he were to order 16 cases of Stein beer at a time, what would be the average inventory level?
A)4 cases
B)12 cases
C)8 cases
D)20 cases
E)16 cases

Question

Quizplus · Accepted Answer

The average inventory level when ordering 16 cases at a time would be half of the order quantity, which is 8 cases. This is because, on average, inventory levels would cycle from full (16 cases) to empty (0 cases), averaging out to 8 cases.

The Manager of the Quick Stop Corner Convenience Store (Which