Flanders Bar and Grill Orders Cleaning Supply Kits Using the EOQ

Multiple Choice

Flanders Bar and Grill orders cleaning supply kits using the EOQ model. The restaurant estimates that it uses 525 kits per year. The purchase price per kit is $12 with an estimated carrying cost rate of 15%. The cost to place an order from the kit supplier is $10. What is the average inventory level that the restaurant should expect?

A) 212.5
B) 76.4
C) 525
D) 38.2