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 sacks
B. 30 sacks
C. 9 sacks
D. 15 sacks

Answer 1

The correct answer is choice A, 6 sacks.

If Mr. Drucker maintains an inventory of 15 sacks of sugar on his shelves and currently only has 9, then he will need to order an additional 6 sacks of sugar in order to maintain his desired inventory.