Chapter 10 Homework i 4 10 points eBook Print References Saved Gibson Manufacturing Company obtains its raw materials from a variety of suppliers. Gibson's strategy is to obtain the best price by letting the suppliers know that it buys from the lowest bidder. Approximately four years ago, unexpected increases in demand resulted in materials shortages. Gibson was unable to find the materials it needed even though it was willing to pay premium prices. Because of the lack of raw materials, Gibson was forced to close its manufacturing facility for two weeks. Its president vowed that her company would never again be at the mercy of its suppliers. She immediately ordered her purchasing agent to perpetually maintain a one- month supply of raw materials. Compliance with the president's orders resulted in a raw materials inventory amounting to approximately $1,770,000. Warehouse rental and personnel costs to maintain the inventory amounted to $7,700 per month. Gibson has a line of credit with a local bank that calls for a 11 percent annual rate of interest. Assume that Gibson finances the raw materials inventory with the line of credit. Required Based on the information provided, determine the annual holding cost of the raw materials inventory. Annual inventory holding cost Hel

Gibson Manufocturing Company obtains its raw materials from a variety of suppliers, Gibson's strategy is to obtain the best price by letting the suppliers know that it buys from the lowest biddec. Approximately four years ago, unexpected increases in demand resulted in materials shortages. Gabon was unable to find the matetials it needed even though it was willing to pay premium prices. Because of the lack of raw noterials, Gibson was forced to close its manufacturing facility for two weeks. its president vowed that her company would never again be at the mercy of its suppliers. She immediately ordered her purchasing agent to perpetually maintain a onemonth supply of raw materials. Compliance with the president's orders resulted in a raw moterials imventory amounting to approximately $1770000. Warehouse rental and personel costs to maintain the inventory amounted to $7700 per month. Gibson has a tine of credit with a local bank that calls for a 11 percent annual tote of interest. Assume that Gibson finances the raw materials inventory with the line of credit. Required Based on the information provided, determine the annual holding cost of the raw materials inventory