A candle shop sells a variety of candles at Beachfront Village. The shop operate

Question

A candle shop sells a variety of candles at Beachfront Village. The shop operates 20 days a month. A specially scented candle has a MONTHLY demand of 360 boxes and the demand is constant throughout the month. This candle is produced in-house at a rate of 36 boxes per DAY. It costs $60 to set up production equipment and tools to produce this scented candle. MONTHLY holding cost is $2 per box. Which of the following statements is correct for the optimal inventory policy that minimizes the total MONTHLY inventory costs? ?The minimum total inventory cost (i.e. setup cost and holding cost) is more than $250 per MONTH. ?"takes about 6 days to produce all boxes requested in one order. O The inventory cycle time is less than 10 days. O The optimal/economic order quantity is less than 200

Explanation / Answer

Which of the following statements is correct for the optimal inventory policy that minimizes the total monthly inventory costs?

A) The minimum total inventory cost (i.e. setup cost and holding cost) is more than $250 per MONTH.

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