Ordering Cost, Carrying Cost, and Total Inventory-Related Cost PLEASE SHOW HOW YOU GOT YOUR ANSWERS
La Cucina Company sells kitchen supplies and housewares. Lava stone is used in production of molcajetes (mortars and pestles used in the making of guacamole) and is purchased from external suppliers. Each year, 7,000 pounds of lava stone is used; it is currently purchased in lots of 500 pounds. It costs La Cucina $5 to place the order, and carrying cost is $2 per pound per year.
Required:
1. How many orders for lava stone does La Cucina place per year? Round your answer to the nearest whole amount. orders per year
2. What is the total ordering cost of lava stone per year? $
3. What is the total carrying cost of lava stone per year? $
4. What is the total cost of La Cucina's inventory policy for lava stone per year?