The Demand for Motorcycle Tires Imported by Dixie Import-Export Is

Multiple Choice

The demand for motorcycle tires imported by Dixie Import-Export is 40,000/year and may be assumed to be uniform throughout the year. The cost of ordering a shipment of tires is $400, and the cost of storing each tire for a year is $2. Determine how many tires should be in each shipment if the ordering and storage costs are to be minimized. (Assume that each shipment arrives just as the previous one has been sold.)

A) 5,500
B) 4,000
C) 3,500
D) 3,000