For the past three years, Hawkeye Army Surplus Store has had excessive inventory holding costs. Management believes the excessive costs are due to the large inventory purchase orders the company places. The company hires a consultant, Brad Miles, to analyze the problem and suggest a solution. Information about two products, combat boots and backpacks, is as follows:

In order to balance the cost of placing a purchase order against the overhead cost of controlling inventory, how many pairs of combat boots should Brad suggest Hawkeye purchase at a time? How manybackpacks?

Transcribed Image Text:

Combat Boots Backpacks 5,000 packs $55 $16 20,000 pairs Annual market demand Cost per unit Annual carrying cost per unit Ordering cost. $20 $500 $500