Question

Mr. Drucker uses a periodic review system to manage the inventory in his dry goods store. He likes to maintain 15 sacks of sugar on his shelves based on the annual demand figure of 225 sacks. It costs $2 to place an order for sugar and costs $1 to hold a sack in inventory for a year. Mr. Drucker checks inventory one day and notes that he is down to 9 sacks; how much should he order?

A. 6 sacksB. 30 sacksC. 9 sacksD. 15 sacks

Answer 1

6 sacks

Explanation:

Mr. Drucker tries to always hold 15 sacks on his shelf to keep his inventory in stock. He currently has 9 sacks. Since 15 - 9 = 6, he needs to order 6 sacks.

This problem has many extraneous values which are good information about Mr. Drucker's buisness but do not pertain to how much he needs to order to maintain 15 sacks on his shelf.