Ready Tees, an on line retailer of t-shirts, orders 100,000 t-shirts per year from its manufacturer. Ready plans on ordering t-shirts 12 times over the next year. Ready receives the same number of t-shirts each time it orders. The carrying cost is $0.10 per shirt per year. The order cost is $500 per order. What is the annual ordering cost of the t-shirt inventory (rounded to the nearest dollar)?
A) $5,000
B) $6,000
C) $10,000
D) $12,000

Question

Quizplus · Accepted Answer

To find the annual ordering cost, we need to calculate the number of orders for the year and multiply it by the order cost. We can find the number of orders by dividing the annual demand by the order quantity:

100,000 shirts / 12 orders = 8,333.33 shirts per order

Since we can't order a fractional number of shirts, let's round up to 8,334 shirts per order.

So, the annual ordering cost would be:

12 orders * $500 per order = $6,000

Therefore, the best choice is B.

Ready Tees, an on Line Retailer of T-Shirts, Orders 100,000