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.
-Suppose the annual demand is 8,000 units and the cost per can is $3 with a holding cost of 10%.What is the required order cost per lot?

A) 38 cents
B) $3.20
C) $32
D) $1.44