Scenario 11.2 - S&H Mercantile

Multiple Choice

Scenario 11.2 - S&H Mercantile
The S&H Mercantile in Luther is the only game in town for a number of items,and tries valiantly to use only the storage space needed to display items since there is no stock room in the back of the store.One popular item,a 16-ounce can of dehydrated water,takes up 20 square inches of shelf space.The shelf space available for this item measures five feet by four feet.The store manager would like to order a quantity that can fill the shelf space without stacking and without needing to store cans elsewhere in the store.The amount ordered should all be on display once the S&H runs out and ideally would arrive just as the last can is purchased.
-Drought conditions spike demand during the summer to an annualized rate of 27,000 cans per year and the price rises to $12 per can.If the ordering cost per lot is 75 cents,what is the holding cost percentage?

A) 3.1%
B) 1.81%
C) 31%
D) 18.1%